U.S. President Donald Trump warned that he may remove all subsidies for GM, which has announced plans to close down and downsize several U.S. factories.
“Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. We are now looking at cutting all GM subsidies, including for electric cars. 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,” Trump wrote on his Twitter account Tuesday. Trump’s words come in just one day after GM announced plans to close down four factories in the U.S. and one in Canada, laying off 14,800 workers. General Motors stock was down 2.55 percent compared to the previous day.
Trump’s subsidies removal may possibly refer to the reduction of tax subsidies of 7,500 dollars for electric car purchasers. Thanks to the subsidies, General Motors was able to sell Chevrolet Volt in the 30,000 dollar range. General Motors is actively lobbying congress to extend electric car subsidies, which phases out after it sells 200,000 vehicles.
The General Motors shock arising from the Rust Belt comes as an unpleasant surprise for the Trump administration, which will face negotiations with China on trade issues during the G20 meeting to be held in Buenos Aires in Argentina on Friday.
The Democrats and the automobile industry say that Trump’s “eye for eye” approach to trade has driven General Motors out of the country. Due to steel tariffs and China’s retaliation tariffs, the U.S. automaker is on the verge of paying an additional 1 billion dollars.
In an interview with the Wall Street Journal on Monday, Trump said that it had nothing to do with tariffs and blamed the Fed and its Chairman Jerome Powell on General Motors' massive restructuring. In a 20-minute interview with the Washington Post, Trump said that he “responded by interest rate hikes and criticizing the Fed’s other policies” to deal with declining stock prices and GM restructuring. “I’m doing deals and I’m not being accommodated by the Fed. I’m not even a little bit happy with his appointment of Jay,” he said.
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