Experts Say GM Layoffs Are ‘Just the Start’ of Fallout From Trumponomics

When running for president, Donald Trump vowed that no American auto plants would close.

“If I’m elected, you won’t lose one plant. You’ll have plants coming into this country,” he said at a campaign rally in Michigan in October of 2016. “You’re going to have jobs again, you won’t lose one plant. I promise you. I promise you.”

This week’s news that GM is closing plants and laying off nearly 15,000 people as it discontinues several models of car in preparation for the transition to autonomous vehicles has brought those broken promises to the forefront.

But, according to a new NBC News report, these closings are only the beginning as GM alone has lost $1 billion because of Trump’s tariffs on steel and aluminum.

“They can read the crystal ball and see what’s coming,” said Robert E. Scott, a senior economist at the Economic Policy Institute. “This is the chickens coming home to roost on the broader Trump economic policies.”

According to Scott, Trump’s trade policies make no sense and  his tax cuts have been counterproductive. “The tax cuts are raising the country’s deficits while do nothing to spur investment,” he said.

“It was counter-productive. All this happy talk about investment is just that,” Scott added, “most companies have used money from the tax cuts to increase dividend payments to shareholders and buy back stocks. If nothing is done to address the problems created by Trump’s budget and failed trade policies, the problem is going to get worse.”

Auto industry analysts believe there will be continuing  auto industry downsizing. They also say that Trump’s trade policies are making a difficult situation much worse.

“The automotive market has been shifting away from conventional sedans and more to utility vehicles. It’s no longer a U.S. phenomenon, it’s true in markets around the world. And GM is the one with the most excess capacity in sedans,” said Bernard Swiecki, from the Center for Automotive Research. “Trump’s tariffs on steel and aluminum, meanwhile, are making the razor thin profits on sedans even smaller,” he said.

GM has estimated that the new tariffs imposed by Trump over the past year have cost the company hundreds of millions of dollars. In order to stay in business they have to pass these costs on to the Americans who buy the cars. But increased prices mean fewer people can afford the cars, and thus GM will be selling less cars, hurting their profits even more.

The president, who has no knowledge of international trade or economics, said he would retaliate against GM for their actions. He has threatened to take steps to harm the auto marker, such as removing government subsidies.