General Motors’ plan to lay off thousands of employees and shutter up to four U.S. factories poses a new political challenge for President Trump.
Trump wooed the industrial Midwest in 2016 with his pledge to revive American manufacturing and crack down on foreign rivals, winning Ohio and Michigan.
Those two states critical to Trump’s victory are set to suffer a major blow if GM goes through with a planned idling of factories in Lordstown, Ohio, and Detroit-Hamtramck, Mich.
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The closures could pose devastating consequences for some of Trump’s most ardent supporters as the mounting costs of the president’s trade agenda threaten to derail the region’s economy.
Trump and a bipartisan coalition of lawmakers have blasted GM and promised to push CEO and Chairwoman Mary Barra to keep the targeted plants running.
On Tuesday, Trump threatened to cut off GM from a federal tax credit for electric vehicles, tweeting that he was “very disappointed” in their plans.
“We are now looking at cutting all @GM subsidies, including … for electric cars,” he tweeted.
“The U.S. saved General Motors, and this is the THANKS we get!” Trump added. “I am here to protect America’s Workers!”
Trump has signaled that he understands the high stakes involved.
On Monday, hours after the GM announcement, Trump said he had directly warned the company to keep its operations in Ohio.
“I love Ohio,” Trump told The Wall Street Journal. “I told them [GM], ‘you’re playing around with the wrong person.’ ”
“At the end of the day, Trump will have overpromised enormously to his Midwestern and Southern constituents,” said Daniel Alpert, managing partner of investment firm Westwood Capital, about the challenge of preserving GM’s jobs.
“He’s not going be in particularly good standing 12 months from now.”
Trump wasn’t alone in sharing his anger over GM’s announcement, which sparked a firestorm of criticism from both parties in Washington.
The company announced that it would it lay off roughly 15,000 employees and halt production at five North American factories: the vehicle assembly plants in Lordstown and Detroit-Hamtramck; a plant in Oshawa, Ontario, Canada; and parts factories in White Marsh, Md., and Warren, Mich.
Those plants assemble and produce parts for several Chevrolet, Cadillac and Buick sedans the company will cease building within the next two years. If GM does not reassign a new product to the targeted factories, 5,901 hourly and 804 salaried workers could lose their jobs in those facilities.
GM has defended the move as essential to the long-term health of the ailing auto giant.
“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,” GM said Tuesday.
Those light truck models make up 70 percent of new vehicle sales in the U.S. each month and closer to 80 percent for GM, said Morningstar Research equity strategist David Whiston.
“GM’s focusing on where it can really make the most of its money and also invest for the future,” Whiston said. “I would expect these plants are probably going to close, and most of these [light] vehicles do go away.”
In many ways, GM’s overhaul is the end result of years of industrywide trends for automakers in the U.S. GM, like Ford Motor Co. and Fiat Chrysler, has steadily scaled back its U.S. sedan production as SUVs and pickup trucks dominate domestic sales.
Trump in the past has also been quick to take credit when U.S. firms, including automakers, pledged to create jobs.
The president hammered GM quickly after taking office when the company had announced plans to move some 450 jobs for full-size truck production to Mexico.
After Trump threatened a border tax on the company, GM in January 2017 announced that it would invest $1 billion in the U.S. and touted investments it said would maintain 7,000 jobs. Trump quickly hailed those moves.
But that involvement also threatens to leave Trump vulnerable when companies make plans to pull back.
In the case of GM, the political challenge is particularly stark because of Ohio and Michigan.
Those states are crucial proving grounds for the president’s economic agenda and political viability. His vow to reverse decades of industrial outsourcing helped him win those two states and Wisconsin, cleaving thousands of blue-collar workers from the Democratic Party.
In Ohio and Michigan in particular, the pullback from car manufacturing could take a heavy toll on the local economy.
Trump has insisted that his deregulatory, tax and trade policies brought industrial jobs streaming back to those states.
The president has also made frequent trips to Ohio to tout his agenda and in his comments Monday singled out the potential closure of the Lordstown plant.
“This country’s done a lot for General Motors, you better get back in there soon. That’s Ohio, and you better get back in there soon,” Trump said Monday, recounting a Sunday phone call with Barra.
The two states are expected to be fierce 2020 battlegrounds.
Trump and Republicans have already suffered a political setback in Michigan, where the state elected a Democratic governor and senator in the midterms.
Ohio Republicans, though, won all but one statewide race in the midterm elections, with Sen. Sherrod Brown the only victorious Democrat.
Brown, who is mulling a 2020 presidential run, is also uniquely popular in Ohio and boasts close connections with unions and autoworkers.
The Lordstown plant closure, which Brown called “corporate greed at its worst,” could magnify the Midwestern economy as a 2020 campaign issue and boost the already bright presidential spotlight on the state.
GM’s moves have also put a new spotlight on Trump’s economic policies, in particular tariffs, which many critics say have hurt the Midwestern economy. Manufacturers and farmers say those tariffs have led to higher supply prices and waning foreign demand that cuts into profits.
GM said Trump’s tariffs on steel and aluminum have cost it $1 billion.
Economists say there’s more behind the company’s downsizing than trade policy.
“There’s a lot of aspects to it, but the reality is we’re in a peaking vehicle market and that makes it harder to bring production back,” said Diane Swonk, chief economist at Grant Thornton. “We’ve already lost a lot of those jobs and a lot of those workers.”
Trump has also mulled imposing tariffs and quotas on foreign-tagged cars that could drastically raise prices across the industry.
To many the efforts to keep the GM jobs will be an uphill fight for Trump.
“There’s no way to really win at this,” Swonk said. “You can’t turn back the hands of time. All you can do is move forward.”