US President Donald Trump threatened to cut subsidies to General Motors on Tuesday, a day after the US automaker’s bruising layoff announcement that hits politically crucial states in the US Midwest.
It was the latest angry outburst from Trump who has frequently attacked US companies that fail to fall in line behind his promises to protect US jobs.
“The US saved General Motors, and this is the THANKS we get!” Trump said on Twitter, alluding to the government bailout during the financial crisis. “We are now looking at cutting all @GM subsidies, including for electric cars.”
Trump’s statement – which sent GM shares lower – came after the automaker on Monday announced it was cutting 15 per cent of its workforce, shuttering five plants in the US, including two in Michigan and one in Ohio, key battleground states that Trump narrowly carried in the 2016 presidential election.
GM defended the move as necessary to position the company for a changing market, as it faces weak sales for smaller cars and shifts resources towards investments in electric and autonomous vehicles.
The company responded to Trump saying it remains “committed to maintaining a strong manufacturing presence in the US, as evidenced by our more than $22 billion investments in US operations since 2009.”
And it said “many” of the workers impacted by the plant closures “will have the opportunity to shift to other GM plants,” where it produces popular and top-selling trucks and SUVs.
The US currently provides subsidies to car buyers of $2,500 to $7,500 for electric vehicles by all automakers depending on the model, and how many have been sold. GM produces the all-electric Chevrolet Bolt, and already was expecting to see the subsidies drop early next year.
Unions blasted GM for the announcement, while Democrats lambasted Trump for supporting a large corporate tax cut that was sold as a job-creating programme, but in fact boosted company profits.
Some observers also took aim at Trump’s trade policies, which raised costs sharply for automakers due to the tariffs he imposed on imported steel and aluminium.
Although GM said on Monday the plant closures were not related to the tariffs, the New York Daily News blamed the duties, and published a cartoon on the front page showing a GM vehicle carrying Trump “off a cliff.”
Companies subject to Trump’s attacks typically have been reluctant to respond directly, but industry groups like the Business Roundtable have frequently criticised the administration’s trade policies for damaging US competitiveness and raising costs.
The stakes for Trump with mass GM layoffs are especially high given the US president’s vows to revive smaller cities and towns throughout the rust belt that have suffered job losses that Trump blames on bad trade agreements negotiated by his predecessor.
Trump raised the heat on Tuesday, taking a shot at GM’s push into overseas markets, especially China, where it now sells more vehicles than in the US.
“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,” he said on Twitter. “I am here to protect America’s Workers!”
The company denied any production of vehicles meant for the US market was being sent overseas.
Despite the political blowback, GM shares finished up nearly five per cent on Monday, with many analysts praising the cuts as necessary due to weak demand for sedans and expectations of slowing sales in the US overall.
But GM shares fell sharply after Trump’s tweets, closing down 2.6 per cent at $36.69.