Editorial: Trump shares blame for GM's cutback
President Donald Trump can shake his fist all he wants at General Motors Corp. CEO Mary Barra, but his trade policies are a direct contributor to GM's decision to lay-off 6,000 salaried workers and idle five auto plants.
Ultimately, 14,300 jobs across the company could be affected. Many thousands more will disappear from GM suppliers as the contraction ripples through the industry.
This is apparently the short-term pain the Trump administration conceded would come from its trade war with China and other trading partners in exchange for a promised long-term gain from a fairer playing field.
But while the pain is real and immediate, the gain is far less certain.
Critics of Trump's tariffs on steel, aluminum and an array of other products warned they would slow a robust economy and lead to substantial job losses, while driving up consumer costs.
The Tax Foundation predicted the Trump tariffs would reduce long-term GDP growth by 0.12 percent, or $30 billion, and kill more than 94,000 jobs. The foundation warned the additional tariffs proposed by the president, including new levies on automobiles and auto parts, would lower growth by an additional .38 percent and cost another $94 billion and nearly 300,000 full-time jobs.
And yet Trump imposed the tariffs anyway in the name of protecting jobs in a virtually full-employment labor market.
For GM, the tariffs were not the driving factor behind the decision to take costs out of its operations well ahead of an economic downturn. But they did increase the urgency to move.
Ford Motor Co. has called the tariffs on the commodities it uses to make vehicles a $1 billion headwind. The impact on GM is likely about the same.
That unexpected and unnecessary cost came at a time when all automakers must maximize profits from their current business to invest in the autonomous future. They also must prove to a skeptical Wall Street that they are viable competitors in the next iteration of the auto industry.
Eliminating most of their car models in favor of producing the more profitable SUVs and light trucks fits into that strategy, and drove GM's decision to reshape its operations.
But the trade war limited the company's options. It had to move quickly to recover the money lost to the tariffs.
A further complication is the uncertainty about the North American Free Trade Agreement, which Trump scrapped in favor of the United States/Mexico/Canada Agreement (USMCA), which faces an uncertain fate when it goes before Congress.
The new trilateral trade pact is more restrictive on automakers, will drive up production costs and give producers less flexibility in where and how they build vehicles.
Trump is labeling General Motors an ingrate because it is idling plants and laying off workers a decade after receiving a bail-out from taxpayers.
But GM and the other automakers have a responsibility to make decisions that best serve their long-term survivability.
Trump's ill-advised trade war has forced them to cut deeper and sooner than they might otherwise have had to do.
And so far, the promised pay-off of his job-killing tariffs is nowhere in sight.