General Motors' shares fall after Trump threatens to cut its subsidies
US President Donald Trump has threatened to cut subsidies for General Motors Co. in retaliation for the automaker’s decision to shutter plants and slash jobs.
On Monday, GM announced it would make overhauls that would result in $6 billion in cost reductions by 2020, including closing up to five plants in the US and Canada and laying off 15 percent of its salaried workforce equal to a total of some 14,700 jobs.
In response, Trump on Tuesday took to Tweeter, saying, "We are now looking at cutting all @GM subsidies, including ... for electric cars."
Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including....
— Donald J. Trump (@realDonaldTrump) November 27, 2018
Meanwhile, Trump and Canadian Prime Minister Justin Trudeau, during a phone call, “discussed their disappointment in the announced closures of General Motors plants in their respective countries,” according to White House spokesman Hogan Gidley.
Under federal law, GM cars are eligible for a $7,500 tax credit, however, it is unclear how the Trump administration can limit those credits.
Trump appears to have referred to the credit for fully electric vehicles, which originated in the 2009 stimulus bill and was extended in the Republican tax bill which he signed in 2017.
Following the tweets, GM’s shares decreased on Tuesday afternoon and were down more than 3 percent, experiencing the worst day in a month.
The company released a statement, saying that it is "committed to maintaining a strong manufacturing presence in the US," adding, "many of the US workers impacted by [plant closures] will have the opportunity to shift to other GM plants."
Analysts say that Congress cannot revise the electric vehicle tax credit unless it changes the law entirely so that it will not affect only one company.
“Don’t imagine they can go back and single one company out in the tax code,” said Clayton Allen, an analyst at research firm Height Capital Markets.
This is not the first time Trump threatened a US company as he made threats against Harley Davidson in June, saying he would increase taxes on it.
That threat came after the motorcycle maker had announced it would move some production overseas.
The Republican president also threatened Amazon.com Inc in April. Without providing any evidence, he said that the online retailer was not paying the US Postal Service a fair rate and that he would look at policies to address the issue.
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