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What Trump Could Do to Screw With General Motors (and the Auto Industry)

Former friends.
Former friends.
Photo: Pablo Martinez Monsivais (AP)

President Donald Trump cut loose Tuesday about General Motors’ decision to cut 15,000 jobs and potentially shutter four U.S. factories, claiming he’s considering axing “all” of the automaker’s “subsidies.” No one seems to have any idea what, if anything, Trump could do unilaterally with subsidies, but he does have a few options on the table, if he chooses to mess with GM.

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The natural knee-jerk reaction to Trump’s initial statement yesterday was that he must be referring to the federal $7,500 EV tax rebate offered to buyers. But it’s not clear whatsoever how Trump could tackle the rebate—especially for just one automaker—without the help of Congress. And Republican lawmakers in D.C. have even shown an interest in expanding the tax credit, so it’s not expected they would come around to some hamfisted idea to ax the credit, just to spite GM.

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Trump also served up some gobbledygook bullshit about the chicken tax on Wednesday that doesn’t make too much sense.

But Trump’s follow up tweet noted how the president “has great power on this issue” and that because of “the G.M. event, it is being studied now.”

Trump may have no clue what he’s talking about with the chicken tax, but as far as I can tell, there’s at least three things Trump has some control over that could, at the very least, frustrate GM.

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The 25 Percent Tariff on Auto Imports

Trump’s administration has been toying with implementing a 25 percent tariff on all imports, except from Canada and Mexico. We talked about this boneheaded idea over the summer, which is being spearheaded by the Commerce Department and an investigation over whether imports pose a national security threat.

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That investigation appears to be in the final stages, and German news outlets report that Trump could impose tariffs as early as next week.

Per Reuters:

Wirtschaftswoche cited “EU sources” as saying a U.S. Department of Commerce investigation report was on Trump’s desk, adding: “Trump will possibly decide on tariffs as early as next week after the G20 meeting in Buenos Aires.”

It cited the sources as saying the report recommended a 25 percent customs duty on car imports from all countries except Canada and Mexico.

However, the White House has repeatedly pledged not to move forward with imposing tariffs on the European Union or Japan as long as it is making constructive progress in trade talks.

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If I had to make sense of Trump’s nonsensical chicken tax tweet, it reads like a possible threat that he’ll approve the 25 percent import.

GM has previously said a tariff like this could lead to “a smaller GM, a reduced presence at home,” but its imports in the U.S. market come primarily from Canada and Mexico. So if the Canada and Mexico exemption holds, maybe it won’t hurt GM so bad. Though the Regal comes from Europe, the Buick Envision is imported from China, and the Spark’s shipped into the U.S. from Korea.

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But maybe Trump now says fuck it and applies the tariff to all countries. We’ll see?

Stymie Legislation to Expand E.V. Tax Credit

Like I said, I can’t see how Trump nixes the EV tax credit for GM only, but he does have the ability to rebuff any proposed legislation that aims to expand the deal.

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GM certainly wants to make it happen, though. The automaker formed a coalition this month with Tesla and Nissan to lobby Washington to lift the cap on the number of consumers who can take advantage of the $7,500 tax credit.

As it stands, the full $7,500 is available only for the first 200,000 EVs sold by an automaker. From there, the credit winds down, reduced in half ever six months until it’s gone for good. Only Tesla has hit the threshold to date, but GM’s inching closer, reportedly selling 190,000 EVs to date.

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Trump opposing efforts to expand the credit could make it impossible to pass.

Keeping On With Other Tariffs

GM noted Monday that Trump’s decision to impose tariffs on steel and aluminum have already cost the company $1 billion.

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The automaker didn’t lay blame for the decision to lay off 15,000 people on those tariffs, but CEO Mary Barra reportedly said they are among the “headwinds” it’s facing ahead of an obvious and expected slowdown in the auto market that’s to come.

Trump doesn’t seem inclined to ease up anytime soon. And if he—along with the UAW, another sticking point in decisions over which factories will ultimately close, following negotiations with the automaker in 2019—makes it harder for the company to close U.S. factories, the steel and aluminum tariffs could rankle GM even more.

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GM, in the face of pissing off everyone from politicians to local workers, is trying to press on with a smile. Following the uproar it launched this week, the company said in a statement Tuesday that it’s “committed to maintaining a strong manufacturing presence in the U.S.” and that “many of the U.S. workers impacted by these actions will have the opportunity to shift to other GM plants where we will need more employees to support growth in trucks, crossovers and SUVs.”

“We appreciate the actions this administration has taken on behalf of industry to improve the overall competitiveness of U.S. manufacturing,” the statement said.

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We’ll see if that sentiment persists once Trump’s through with whatever it is he’s possibly considering to do.

Senior Reporter, Jalopnik/Special Projects Desk

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DISCUSSION

Amazing how the republican party, which was always about small government, now wants to impose all these tariffs to influence the free market. The goal of a publicly traded company is to do what’s best for the shareholders. The company is preparing to survive another downturn so they don’t go through another bankruptcy, requiring more public money or having to shut down completely.

So if GM didn’t do this and the inevitable economic downturn hits and they need another bailout, they look bad. Now they cut costs and make it a leaner company and it looks bad. They can’t win in the public eye. It’s sad that so many jobs will be lost, but it’s one of the cruel consequences of a free market.

I really hope with the low national unemployment rate many of the workers will be able to find work quickly.