Trump Threatens to Cut GM Subsidies, Repeats "Magic Wand" Claim

In September, Trump proclaimed he had an economic magic wand. He made a similar claim yesterday, then threatened GM.

Economic Magic Wand Claim September 10

Manufacturing Magic Wand Claim November 26

At a Mississippi campaign rally yesterday, Trump bragged that his administration had "found the magic wand" for manufacturing in the United States.

This was just a few hours after GM announced it's closing 8 plants, 4 in the US, and shedding close to 15,000 workers.

In response to the GM announcement, Trump told GM CEO Mary Barra she had "better" reopen plants in the US soon.

Trump Chastises GM November 27

Trump Threatens to Kill GM Subsidies November 27

Yesterday in reference to the Chevy Cruze Trump offered this threat. "Their car is not selling well. So they'll put something else -- I have no doubt that, in a not-too-distant future, they'll put something else. They better put something else in."

Or what?

Today we found out, sort of.

Trump never finished the sentence.

Tariffs Coming

Business Insider discusses Potentially Devastating Tariffs.

Chris Krueger, a policy analyst at Cowen Washington Research Group, told Business insider that GM's announcement on Monday could add more fuel to Trump's desire to impose a 25% tariff on all cars, trucks, and auto parts coming into the US.

Gary Cohn, Trump's former top economic adviser, has said the president asked him why all cars couldn't be made in America.

The move would be economically devastating, economists say. A study from the Peterson Institute of International Economics found that a 25% auto tariff would cause auto production in the US to fall by 1.5% over the first three years and result in a net loss of 195,000 jobs.

Krueger was confident that regardless the impetus for the move, there is only one outcome in the end. "Tariffs are coming," he said.

No Magic Just BS

We are about to find out how little "magic" there is in Trump's wand.

Mike "Mish" Shedlock

Comments (40)
No. 1-18
Sechel
Sechel

how about threatening to repeal the 25% chicken tax mr trump? fact is those g.m. cars aren't selling. if trump wants g.m. to continue building cars they can't sell he's going to have be prepared to buy them. pretty soon we'll look a lot more like china.

one can argue g.m. has wasted money with stock buy-backs and dividends. one can even argue tariffs and subsidies and bail outs prevented g.m. from making hard choices. but you can't brow beat someone into making cars

Why isn't Trump banning all imports across all industries. Based on his logic, we'd be an economic super-power immediately.

stillCJ
stillCJ

Editor

Good, libertarians like Mish & I don't think the government should be subsidizing auto companies anyway. GM should have been allowed to fail; all their lenders (bondholders that is) got completely screwed anyway.

shamrock
shamrock

I can't imagine something much more socialist than a "President" who thinks he should tell CEO's how to run their corporations.

JonSellers
JonSellers

The United States is simply not competitive internationally. We are too much like the Brits. We can't engineer good products because that takes time. And shareholders want their money now. We can't build good products because or workforce is uneducated on not skilled in relevant trades. We are great burger flippers. Lousy welders. Our management is off on golf vacations learning about diversity instead of managing.

Our future is using military power to keep the value of the dollar high. And forcing foreign states to make stuff that we can't for us, while we give them back treasury bonds. It's what we are good at. And God help us if we can't even pull that off one day.

2banana
2banana

Magic.

Obama said the economy was "structurally changed" and 8% unemployment (with those with jobs slinging coffee) was the new normal.

In fact, just to keep 8% unemployment, he would need TARP, the stimulus, HARP, HAMP, QE infinity and adding more to the debt that all other administrations combined.

That we would never see GDP over 4%

That we could never defeat ISIS.

That manufacturing is dead in America.

And that we would bankrupt the coal industry.

That food stamp use would only increase exponentially.

That America would never be oil independent or an exporter of oil.

Etc.

I will take the new magic. It is at least a step in the right direction.