Washington – President of Trump in 2016, the commitment to restore production places suffered a great failure this week, when General Motors announced that he would close five factories and dismiss almost 15,000 employees.
It was a destructive blow of the president’s repetitive promises to rebuild national rust belt factories in what he said that he would be a renaissance of a up-to-date economic growth and creating jobs.
“If you are chosen, you will not lose one plant, you will have plants arrived in this country, you will have a job again, you will not lose one plant, I promise,” said Trump in October 2016 at a rally of campaign in Warren, Mich.
“Everyone is coming back. Everyone is coming back – said the president at a rally in Youngstown in Ohio in July 2017. “Don’t move, don’t sell your home. We intend to fill these factories or tear them and build up-to-date ones. “
But on Monday, GM said that he had to reduce $ 6 billion a year, releasing employees from the ranks of management, and thousands of assembly lines in Canada and the United States
The reason: sales of cars have dropped by 1 million vehicles since September 2017, and “data on retail, industrial production and apartments suggest that the economy is tiring,” Washington Post said on Tuesday.
“We would be very surprised if the escalate in production is gathering; All cyclical production indicators that we follow have reached the peak and some are falling, “said Ian Shepherdson, the chief economist of Pantheon macroeconomics.
GM plans to stop production in 2019 in three of its plants in Lordstown, Ohio, Detroit-Hamtramck, Michigan and in Oshawa, Ontario. He stops construction models in these plants, including Chevrolet Impala, Cruze and Volt, along with Cadillac CT6 and Buick Lacrosse.
GM also stops production at the transmission plants in White Marsh, MD and Warren, Mich.
The specter of plant closures in the Middle West raises deep political questions for Trump in two years if it is looking for re -election.
In 2016, he wore four states in which the automotive industry is the main employer: Wisconsin, Michigan, Ohio and Pennsylvania. They include nearly a quarter of 270 electoral votes needed to win the re -election.
And in a key republican state, such as Ohio, United Auto Workers is a critical voting block.
“He came to our community and said:” Don’t sell your home. These works are coming back, “said Post David Green, president of Uawa Local 1112.” We didn’t see only losing a job here. “
Trump won about 40 percent of its UAW members in 2016, but now the vote is doubtful.
One of the key economic factors hovering through the automotive industry and the US economy in general are Trump’s tariffs that played havoc on the stock exchange and with American producers.
The last report of T. Rowe Price warns investors to adopt a “watchful approach to growing trade tensions.”
“Managers believe that new commercial policies will probably not use American economic expansion, in which American capital markets have achieved new Maksa this year, but believe that market risk has increased,” says the report.
Alan Levenson, the main economist of the US Rowe Price, claims that “the risk can increase significantly if President Trump warns threats to apply a wide tariff – as much as 25 percent – in the case of cars and car parts.”
“This may cause a recession in the automotive industry and we do not know what China can take care of,” says Levenson. “There are no rules in this.”
The American automotive industry employs over 7 million people. “If car volumes would drop by 15 to 20 percent, because of this I would easily notice 100,000 jobs,” he says. “The economic impact can be so negative that it is difficult to understand.”
But Trump is still threatening to raise tariffs to China and our other American trading partners, which would worsen matters. He should read September, who in September a stunning article in the conservative Forbes magazine by a senior economy collaborator Frances Coppola. Here is a fragment:
“Let’s stop pretending. The import tariff is nothing but tax for consumers and companies. Not in the export country, but importing. Thus, a 10% tariff for $ 200 billion in Chinese imports, which President Trump has just imposed, is actually a new tax for Americans. And this will hurt America much more than China. “
Then he says: “If other countries respond to President Trump’s tariffs in nature, production will fall in all countries. Trade will shrink and the global GDP will be lower. “
“Everyone is a loser in the trade war,” he adds.
