Trump threatens to cut GM subsidies in retaliation for US job cuts


  • Auto
  • Thursday, 29 Nov 2018

End of the road: An employee loads cars onto a trailer at the GM Lordstown plant, in Ohio. GM said it would end production at five North American plants including Lordstown. — AFP

WASHINGTON: US President Donald Trump has threatened to eliminate subsidies for General Motors Co in retaliation for the automaker cutting US jobs and plants, and the automaker also took fire from Canadian political and labour leaders for cutbacks there.

“The US saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including... for electric cars,” Trump said on Twitter.

Trump did not explain what “subsidies” he was referring to.

GM electric vehicles are eligible for a US$7,500 tax credit under federal law, but it is not clear how the administration could restrict those credits or if Trump had other subsidies in mind.

Trump’s harsh words rattled investors, who bid down GM shares by 2.6% on Tuesday after sending them up on Monday in response to the automaker’s cost-cutting.

Trump and Canadian Prime Minister Justin Trudeau “discussed their disappointment in the announced closures of General Motors plants in their respective countries” during a phone call on Tuesday, White House spokesman Hogan Gidley said.

The wrath of the leaders of the United States and Canada dramatised the challenges GM and its Detroit rivals will face as they restructure to cope with the most dramatic technology and market shifts in decades.

Trump has made boosting auto jobs a key priority during his almost two years in office and has often attacked automakers on Twitter for not doing enough to boost US employment.

The Republican president on Tuesday escalated his attacks on GM’s plan to cut 15,000 jobs and mothball five North American factories, including four in the United States. Among those four is a car factory in northeast Ohio, a state critical to victory in the 2020 presidential campaign.

GM said in a statement following Trump’s comments that it was “committed to maintaining a strong manufacturing presence” in the United States after investing US$22bil in operations here since 2009 and will add new jobs in electrification and autonomous vehicles.

The cuts will “position the company for long-term success and maintain and grow American jobs,” GM said, adding that many workers at impacted plants will be able to move to other GM factories.

GM chief executive Mary Barra spoke to Trump over the weekend to discuss the cuts and was at the White House on Monday to meet with economic adviser Larry Kudlow.

Kudlow told reporters on Tuesday that the administration had helped GM with fuel efficiency standards and other regulations.“We’ve done this to help you and I think his disappointment is, it seems like that they kind of turned his back on him,” Kudlow said.

It was not the first time that Trump made threats against a US company. In June he threatened Harley Davidson with higher taxes after the motorcycle maker announced it would move some production overseas. Trump has also threatened to take action against Amazon.com Inc, saying repeatedly in April, without providing evidence, that the online retailer was not paying the US Postal Service a fair rate and saying that he would look at policies to address what he said were Amazon’s unfair business advantages.

Trump has not followed up on these threats. Trump also criticised GM for not closing facilities in Mexico or China.

“General Motors made a big China bet years ago when they built plants there (and in Mexico) – don’t think that bet is going to pay off. I am here to protect America’s Workers!” Trump wrote on Twitter.

White House spokesman Sarah Sanders told reporters on Tuesday that the president is looking at options.

“The president wants to see American companies build cars here in America, not build them overseas and he is hopeful that GM will continue to do that here,” she said.

In Canada, workers returned to the assembly line at General Motors’ Oshawa, Ontario, plant on Tuesday, as their union president met with Trudeau and said he was ready for “mass actions” at GM facilities.

GM said on Monday that the Oshawa plant would close in December 2019.

“We’re dealing with a corporation that doesn’t have any respect for Canadian and American workers, and I think we should treat them in the same vein,” said Jerry Dias, national president of Unifor, which represents GM workers in Canada.

Dias said he would meet with the United Auto Workers on Wednesday and discuss the possibility of “mass actions” in GM plants across the two countries. — Reuters

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