Trump vs. General Motors

I doubt that Robert Mueller poses an existential threat to the Trump presidency. He may pose some threat, but American manufacturers pursuing their economic interests may pose a greater one.

The decision by General Motors to shut down several plants in the U.S. and to cut up to 15,000 jobs illustrates the threat. The impact of GM’s decision will be felt most acutely in the industrial Midwest, including states that were crucial to Trump’s 2016 victory. Moreover, as Megan McCardle argues, the decision raises questions about the president’s ability to deliver on a series of promises central to his theme of making America great again.

McCardle contends, persuasively I think, that GM made its move mainly because “Americans just aren’t interested in the smaller sedans many of the affected GM plants manufacture. There’s nothing a president can do to alter this underlying reality.

A president can, as this one has, threaten GM with repercussions for making sensible, if not economically necessary, decisions in response to reality. However, Ramesh Ponnuru argues, persuasively I think, that Trump is quite limited in the extent to which he “can make good on his bluster.” Ponnuru writes:

[Trump is] not going to get congressional support for cutting off subsidies to GM, and there are tight limits on what the executive branch can do on its own — especially when Trump has teed up a challenge to any executive action by signaling it would be designed to target the company.

Ponnuru is also of the view that Trump’s inability to make good on his bluster is a good thing in this instance.

Veronique du Rugy concurs. And she places a goodly amount of responsibility for GM’s decision on the tariffs Trump imposed on metals the company uses to produce cars. Although these tariffs have caused small increases in production costs, I’m inclined to agree with McCardle that this is not a big part of the story. The big part is probably the preference of American consumers.

Still, du Rugy may well be right when she predicts that GM’s announcement “is only the first of several similar ones to come.” Such announcements, more than anything Mueller is likely to do, would strike at the heart of Trump’s presidency.

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