Central planning is never a good look for government. After GM CEO Mary Barra told President Trump the automaker was cutting jobs and production in Michigan and Ohio, the president said he told her, “I heard you’re closing your plant. It’s not going to be closed for long, I hope, Mary, because if it is you have a problem.”
Well, that won’t do at all. We don’t want companies making decisions to please politicians, even ones that sit in the Oval Office. The goal is competitive capitalism, not crony capitalism. Maybe GM’s move is a good business decision — Wall Street seems to think so — or maybe it’s a poor one, but Washington certainly can’t run GM any better than its executives. (It has enough trouble running USA Inc. and it can both tax its customers and owns the printing presses.)
Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including....— Donald J. Trump (@realDonaldTrump) November 27, 2018
Nor should the president demand that instead of building cars in China, it should build them in America. China is a massive market for GM. As Bloomberg’s Shawn Donnan tweeted: “In the first 9 months of this year GM sold almost 2.7m cars in China. Or, put another way, 500,000 more cars than the almost 2.2m cars it sold in the US.”
....for electric cars. General Motors made a big China bet years ago when they built plants there (and in Mexico) - don’t think that bet is going to pay off. I am here to protect America’s Workers!— Donald J. Trump (@realDonaldTrump) November 27, 2018
Just as Japanese automakers make cars here to serve the American market, US automakers should be expected to make vehicles there for that fast-growing market. If you think uncertainty is bad for business investment, then it’s hard to imagine that Washington second-guessing business decisions isn’t chilling in some way.
But there is a subject that the president might have raised with Barra. As the Financial Times noted, “GM and Ford have been hit hard by steel and aluminium tariffs introduced by Mr. Trump as part of his aggressive protectionist trade policy. The two carmakers have said increased raw material prices cost them $1bn each, because their largely-domestic suppliers raised prices following the tariffs.”
James Pethokoukis is a scholar at the American Enterprise Institute.