President Trump “Looking At Cutting All GM Subsidies” Over Plant Closures – But There’s A Catch [News]

He can't do that without Congress.

President Trump "Looking At Cutting All GM Subsidies" Over Plant Closures - But There's A Catch [News]
Lordstown Assembly is one of the plants GM will close by the end of 2019. [Photo: General Motors]

President Donald Trump threatened to cut off GM “subsidies” for its electric vehicles.

Trump took to Twitter to express his frustration at GM’s recent decision to “unallocate” certain production plants by the end of 2019. As it stands, General Motors is planning to shutter the plants, likely leading to job losses in the U.S. and Canada. This news exasperated the president, who chastised CEO Mary Barra and fired off the following tweets:

President Trump told also told reporters he was “very tough” when he spoke to Barra about GM’s recent decision. The Associated Press published a video (picked up by USA Today) where Trump said, “this country has done a lot for General Motors,” referring to the government-backed bailout during the Great Recession. “They better get back to Ohio and soon. So we have put a lot of pressure on them.”

GM is currently positioning itself lay off 15 percent of its salaried workforce and close plants in Michigan, Ohio, Maryland and Ontario, Canada. Trump went further: “They say the Chevy Cruze is not selling well. I said, ‘Well, get a car that is selling well and put it back in.’ I’m not happy about it.” The passenger car market, on the whole, has lost sales momentum in light of more popular crossovers.

President Trump "Looking At Cutting All GM Subsidies" Over Plant Closures - But There's A Catch
GM is closing several production plants in North America to restructure its business and cut costs. [Photo: General Motors]

The catch

With regard to cutting subsidies for electric cars, there are a few issues. So far as we can tell, he’s referring to the $7,500 federal tax credit for electric vehicles. It’s not really a subsidy for GM, as that’s an industry-wide tax credit. It’s also capped at 200,000 cars per manufacturer, which GM will likely surpass by the end of the year, thanks to plug-in hybrids like the Volt and all-electric cars like the Bolt.

The industry-wide credit is also something that would need to be changed by Congress. President Trump can’t act unilaterally on the matter. Vox reported a quote by Garrett Nelson, senior equity analyst at CFRA Research. “Trump would need Congress to pass legislation amending the IRS tax credits for electric vehicles that was in the tax reform passed last year.” They can do that, but that would involve possibly revoking the tax credit for every EV manufacturer – not just GM.

President Trump "Looking At Cutting All GM Subsidies" Over Plant Closures - But There's A Catch [News]
General Motors CEO Mary Barra. [Photo: General Motors]
One of the reasons GM is taking this step is almost undoubtedly due to recent steel and aluminum tariffs. American manufacturers, like Ford, have already taken hits to their bottom line due to increased material costs. General Motors has also warned of the tariffs’ effects, and it makes sense that the company would cut jobs to make up the difference.

So, as it stands, it remains to be seen whether there could be some substance behind the president’s threats. It’s unlikely GM will reverse course, as consumers leave slow-selling sedans behind.