Trump threatens to cut off GM subsidies over job cuts

Trump threatens to cut off GM subsidies over job cuts

Trump threatens to cut off GM subsidies over job cuts

President Donald Trump said Tuesday that he was "very disappointed" that General Motors was closing plants in the United States and warned that the White House was "now looking at cutting all GM subsidies", including for its electric cars program.

General Motors Co.'s pre-emptive strike to get leaner before the next downturn likely will be followed by Ford Motor Co., which has said it is restructuring and will lay off an unspecified number of white-collar workers. A day earlier, Trump issued a vague threat to GM warning it to preserve a key plant in the presidential bellwether state of OH, where the company has marked its Lordstown plant for closure.

Stefan Kooths, economics expert at the Kieler Institute, claims that the White House's protectionist policies are starting to harm the American economy.

Mr. Trump said Monday he is "not happy" with GM's decision and warned Ms. Barra to build another plant in OH soon.

GM said it would phase out certain models of slower-selling cars, halting production at four factories in the U.S. and one in Canada. It will also stop building models assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse.

Those five plants now build cars that won't be sold in the US after 2019, so they could close or get different vehicles to build.

The Detroit-based firm said it is shutting assembly plants in Ohio, Michigan and Ontario in Canada.

Work on six-speed transmissions made at the Warren, Michigan, transmission plant would stop August 1, while the Baltimore transmission plant would stop production April 1, GM said.

"(Trump) believes - as, frankly the prime minister of Canada, (Justin) Trudeau, believes - that the USMCA deal was a great help to the automobile industry and to auto workers", Kudlow told a White House briefing.

"We are right sizing capacity for the realities of the marketplace" CEO Mary Barra said, adding that the cuts prompted by auto industry changes. The company said this is part of a plan that restructures to cut costs and focus more on autonomous and electric vehicles. The company is also halting production or sale of other models, including the compact Chevrolet Cruze, the full-sized Chevy Impala and certain Cadillacs.

"The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future", GM CEO Mary Barra said in a statement. He did not specify how much GM receives in federal subsidies. The second-largest domestic automaker had already scrubbed plans for a second assembly line in Mexico a year ago due to declining passenger vehicle sales.

GM electric vehicles are eligible for a $7,500 tax credit under federal law, but it is not clear how the administration could restrict those credits, which are available to all automakers, from GM alone - or whether he had some other undefined subsidies in mind. Fiat Chrysler Automobiles got out of small and midsize cars two years ago, while Ford announced plans to shed all cars but the Mustang sports auto in the USA in the coming years.

More than 16 months ago, the UAW confirmed that it was discussing with GM the potential threat to plants and jobs from slumping USA sedan sales. The company expects to save about $6 billion by 2020 as a result of the moves.

While the company said in its quarterly earnings late last month that it saw costs jump by US$400 million due to Trump's tariffs on steel and aluminium, a spokeswoman said the latest decisions "are not related to any recent trade or tariff decisions".

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