U.S. stocks clawed most of their way back from a deep slide Thursday that at one point had wiped out the market’s gains for the year. 

 

An early plunge briefly knocked more than 700 points off the Dow Jones industrial average as the arrest of a senior Chinese technology executive threatened to cause another flare-up in tensions between Washington and Beijing. 

 

The sell-off eased by late afternoon, however, after The Wall Street Journal reported that the Federal Reserve is considering breaking with its current approach of steady interest rate hikes, favoring a wait-and-see approach. That was relief to investors worried that the Fed might raise interest rates too fast, which could choke off economic growth.  

No ‘rigid schedule’ of hikes

  

“The Fed is trying to, in essence, come out and make it clear they are not on a rigid schedule of rate hikes next year,” said Quincy Krosby, chief market strategist at Prudential Financial.  

  

The S&P 500 index fell 4.11 points, or 0.2 percent, to 2,695.95. The benchmark index had been down as much as 2.9 percent.  

  

The Dow dropped 79.40 points, or 0.3 percent, to 24,947.67. The average had briefly slumped as much as 784 points.  

  

The technology-heavy Nasdaq composite reversed an early loss to finish with a gain, adding 29.83 points, or 0.4 percent, to 7,188.26. 

 

The Russell 2000 index of small-company stocks gave up 3.34 points, or 0.2 percent, to 1,477.41. 

 

Traders continued to shovel money into bonds, a signal that they see weakness in the economy ahead. The yield on the 10-year Treasury note fell to 2.89 percent from 2.92 percent on Tuesday, a large move. 

 

U.S. stock and bond trading were closed Wednesday because of a national day of mourning for President George H.W. Bush.  

  

Losses in banks and energy and industrial stocks outweighed gains in internet and real estate companies.  

  

Citigroup fell 3.5 percent to $60.06. Halliburton slid 4.7 percent to $29.79. Discovery climbed 4.7 percent to $26.99. 

 

Last week, stocks jumped after Fed Chairman Jerome Powell indicated the central bank might consider a pause in rate hikes next year while it gauges the impact of its credit tightening program.  

Fed meeting ahead

  

The Fed has raised rates three times this year and is expected to boost rates for a fourth time at its Dec. 18-19 meeting of policymakers. That steady pace of rate hikes has begun to worry some investors amid growing signs that some sectors of the economy are hurting, including the U.S. housing market. At the same time, there has been growing evidence that global economic growth is slowing. 

 

“The market seems right now to be focused on increased risks for a 2020 recession,” said Patrick Schaffer, Global Investment Specialist, J.P. Morgan Private Bank. “It’s a very hard market to buy when you see really strong signals that we are indeed late [in the economic] cycle.” ​

Thursday’s initial wave of selling in the market came about as traders reacted to the news that Canadian authorities arrested the chief financial officer of China’s Huawei Technologies on Wednesday for possible extradition to the U.S. The Globe and Mail newspaper, citing law enforcement sources, said Meng Wanzhou is suspected of trying to evade U.S. trade curbs on Iran. 

 

Meng is a prominent member of Chinese society as deputy chairman of the board and the daughter of company founder Ren Zhengfei. China demanded Meng’s immediate release. 

 

The arrest came less than a week after President Donald Trump met with Chinese President Xi Jinping at the G-20 summit in Argentina. 

 

Markets rallied on Monday on news that Trump and Xi agreed to a 90-day stand-down in their trade dispute. That optimism quickly faded as skepticism grew that Beijing will yield to U.S. demands anytime soon, leading to a steep sell-off in global markets on Tuesday. 

Positive remarks from Beijing

 

On Thursday, China’s government said it would promptly carry out the tariff cease-fire with Washington. It also expressed confidence that the two nations can reach a trade agreement. The remarks suggest Beijing wants to avoid disruptions from Meng’s arrest.  

  

Even so, investors remained skeptical.  

  

“Trade tensions aren’t going away,” Schaffer said. “Contradictory statements from the administration have given some people a little bit of pause with respect to the optimism that people felt following the Argentina G-20 conference.” 

 

The renewed jitters over the implications that Meng’s arrest could have on U.S.-China trade negotiations weighed on overseas markets. 

 

In Europe, the DAX in Germany dropped 3.5 percent, while France’s CAC 40 lost 3.3 percent. The FTSE 100 in Britain declined 3.1 percent, its biggest drop since the country held a vote to leave the European Union in June 2016.  

  

The news also resulted in another down day for markets in Asia. 

 

Hong Kong’s Hang Seng index tumbled 2.5 percent and Japan’s benchmark Nikkei 225 fell 1.9 percent. Australia’s S&P/ASX 200 lost 0.2 percent, while South Korea’s Kospi sank 1.6 percent. Shares also fell in Taiwan and all other regional markets. 

 

Oil prices fell sharply as traders appeared to doubt that an expected production cut by OPEC will be enough to boost the price of crude. Benchmark U.S. crude dropped 2.6 percent to settle at $51.49 a barrel in New York. Brent crude, used to price international oils, slid 2.4 percent to close at $60.06 per barrel. 
…

The US trade deficit hit a 10-year high in October as Americans used a stronger dollar to snap up record imports, the government reported Thursday.

The result showed the trade gap has continued to swell despite the punitive tariffs imposed this year on allies and adversaries alike by US President Donald Trump, who has focused intently on the subject with the goal of reducing the deficit.

Amid Trump’s high-stakes trade war with Beijing, the total trade gap rose 1.7 percent to $55.5 billion, driven by all-time high imports, according to the Commerce Department.

The gap in goods trade with China likewise continued to expand, rising two percent to $38 billion, seasonally adjusted, as key exports like soybeans fell.

The October figure handily overshot analyst expectations, and could confirm weaker economic growth in the final quarter of 2018.

Americans bought more medications and imported autos while also taking more vacations, benefiting from the stronger US currency.

Travel by Americans also rose by $200 million, driving up US services imports to a record $46.9 billion.

The deficit in goods also was the highest on record at more than $78 billion, as US imports of goods and services hit a high as well, rising 1.5 percent to $266.5 billion.

Auto imports — another subject on which Trump is battling European leaders — likewise hit their highest level ever, at $31.8 billion.

From January to October, the total trade deficit rose more than 11 percent compared to the same period last year, and the gap in September was $555 million bigger than initially reported.

Long-suffering soy exports, victim of China’s retaliatory tariffs since July, fell by another $800 million in October while exports of aircraft and parts, also sensitive to trade relations, fell $600 million.

Meanwhile, there were declines in imports of computers and telecommunications equipment but not enough to offset the strong gains in pharmaceutical and auto imports for the month.
…

OPEC countries were gathered Thursday to find a way to support the falling price of oil, with analysts predicting the cartel and key ally Russia would agree to cut production by at least 1 million barrels per day.

Crude prices have been falling since October because major producers — including the U.S. — are pumping oil at high rates and due to fears that weaker economic growth could dampen energy demand. The price of oil fell 22 percent in November and was down again on Thursday amid speculation that OPEC’s action might be too timid to support the market.

Saudi Arabia, the heavyweight within OPEC, said Thursday it was in favor of a cut.

“I think a million (barrels a day) will be adequate personally,” Saudi oil minister Khalid Al-Falih said upon arriving to the meeting in Vienna. That, he said, would include production for both OPEC countries as well as non-OPEC countries, like Russia, which have in recent years been coordinating their production limits with the cartel.

That view was echoed by others, including the oil ministers of Nigeria and Iraq.

“I am optimistic that the agreement will stabilize the market, will stop the slide in the price (of oil),” said Iraq’s Thamir Ghadhban.

Investors did not seem convinced, however, and were pushing the price of oil down sharply again on Thursday, with some experts saying there is concern about the size of the cut. The international benchmark for crude, Brent, was down $1.52 at $60.04 a barrel.

“The cartel has to go above and beyond the 1 million barrels cut, to at least 1.4 million to really steady the ship,” said Neil Wilson, chief market analyst at Markets.com.

The fall in the price of oil will be a help to many consumers as well as energy-hungry businesses, particularly at a time when global growth is slowing. And U.S. President Donald Trump has been putting pressure publicly on OPEC to not cut production. He tweeted Wednesday that “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!”

While Saudi Arabia has indicated it is willing to cut production, its decision may be complicated by Trump’s decision to not sanction the country over the killing of dissident journalist Jamal Khashoggi. U.S. Senators say, after a briefing with intelligence services, that they are convinced that Saudi’s de-facto ruler, Crown Prince Mohammed bin Salman , was involved in Khashoggi’s death. Some experts say that gives the U.S. some leverage over the Saudis, though Al-Falih denied that on Thursday.

When asked if the Saudis had permission from Trump to cut production, Al-Falih replied: “I don’t need permission from any foreign governments.”

Experts say this week’s meeting of the Organization of the Petroleum Exporting Countries will influence the price of oil over the coming months. How strongly it does so could depend on Russia’s contribution, which will be determined in a meeting on Friday.

Analysts estimate that if Russia is willing to step up its production cuts, OPEC and non-OPEC countries could trim production by a combined 1.3-1.4 million barrels a day. A cut of 1 million barrels would be the minimum to support the market, and anything less could see the price of oil fall another $10 a barrel, according to Wilson.

“The stakes are high now for OPEC,” he said.

OPEC’s reliance on non-members like Russia highlights the cartel’s waning influence in oil markets, which it had dominated for decades. The OPEC-Russia alliance was made necessary in 2016 to compete with the United States’ vastly increased production of oil in recent years. By some estimates, the U.S. this year became the world’s top crude producer.

OPEC is also riven by internal conflict, especially between regional rivals Saudi Arabia and Iran. One of the key questions in Thursday’s talks is whether to exempt Iran from having to cut production, as its energy industry is already hobbled by U.S. sanctions on its crude exports.

Meanwhile, Qatar, a Saudi rival and Iranian ally, said this week it would leave OPEC in January. While it said it was purely a practical decision because it mainly produces natural gas and little oil, the move was viewed as a symbolic snub to the Saudi-dominated organization.
…

The “yellow vests” in France are worrying greens around the world.

The worst riots in Paris in decades were sparked by higher fuel taxes, and French President Emmanuel Macron responded by scrapping them Wednesday. But taxes on fossil fuels are just what international climate negotiators, meeting in Poland this week, say are desperately needed to help wean the world off of fossil fuels and slow climate change.

“The events of the last few days in Paris have made me regard the challenges as even greater than I thought earlier,” said Stanford University environmental economist Lawrence Goulder, author of the book “Confronting the Climate Challenge.”

Economists, policymakers and politicians have long said the best way to fight climate change is to put a higher price on the fuels that are causing it — gasoline, diesel, coal and natural gas. Taxing fuels and electricity could help pay for the damage they cause, encourage people to use less, and make it easier for cleaner alternatives and fuel-saving technologies to compete.

These so-called carbon taxes are expected to be a major part of pushing the world to reduce carbon dioxide emissions and try to prevent runaway climate change that economists say would be far more expensive over the long term than paying more for energy in the short term.

But it’s not so easy for people to think about long-term, global problems when they are struggling to get by.

Macron said the higher tax was his way of trying to prevent the end of the world. But the yellow vest protesters turned that around with the slogan: “it’s hard to talk about the end of the world while we are talking about the end of the month.”

The resistance to the fuel tax is a personal blow to Macron, who sees himself as the guarantor of the 2015 Paris climate accord, its strongest defender on the global stage. He has positioned himself as the anti-Trump when it comes to climate issues.

The French government quietly fears a Trump-led backlash against the accord could spread to other major economies whose commitment is essential to keeping the deal together.

The fuel tax was not originally Macron’s idea; it dates back to previous administrations. But he vigorously defended it and won the presidency in part on a promise to fight climate change.

So what went wrong?

Yale University economist William Nordhaus, who won this year’s Nobel prize for economics, said the tax was poorly designed and was delivered by the wrong person. “If you want to make energy taxes unpopular, step one is to be an unpopular leader,” he said. “Step two is to use gasoline taxes and call them carbon taxes. This is hard enough without adding poor design.”

Macron, like French presidents before him, made environmental and energy decisions without explaining to the public how important they are and how their lives will change. He’s also seen as the “president of the rich” — his first fiscal decision as president was scrapping a wealth tax. So hiking taxes on gasoline and diesel was seen as especially unfair to the working classes in the provinces who need cars to get to work and whose incomes have stagnated for years.

The French government already has programs in place to subsidize drivers who trade in older, dirtier cars for cleaner ones, and expanded them in an attempt to head off the protests last month. But for many French, it was too little, too late.

The French reaction to higher fuel prices is hardly unique, which highlights just how hard it can be to discourage fossil fuel consumption by making people pay more. In September, protests in India over high gasoline prices shut down schools and government offices. Protests erupted in Mexico in 2017 after government deregulation caused a spike in gasoline prices, and in Indonesia in 2013 when the government reduced fuel subsidies and prices rose.

In the United States, Washington state voters handily defeated a carbon tax in November.

“Higher taxes on fuel have always been a policy more popular among economists than among voters,” said Greg Mankiw, a Harvard economist and former adviser to President George W. Bush.

Even proponents of carbon taxes acknowledge that they can disproportionally hurt low-income people. Energy costs make up a larger portion of their overall expenses, so a fuel price increase eats up more of their paycheck and leaves them with less to spend. And because energy costs are almost impossible to avoid, they feel trapped.

It is also not lost on them that it is the rich, unbothered by fuel taxes, who are hardest on the environment because they travel and consume more.

“The mistake of the Macron government was not to marry the increase in fuel taxes with other sufficiently compelling initiatives promising to enhance the welfare and incomes of the ‘yellow vests,’ said Barry Eichengreen, an economist at the University of California, Berkeley.

Now the question is “How can we address the climate problem while also avoiding producing political upheaval,” Goulder said.

The key is giving a good chunk of money back to the people, Wesleyan University environmental economist Gary Yohe said.

Many economists back proposals that would tax carbon, but then use that money to offer tax rebates or credits that would benefit lower-income families.

The protests, while sparked by fuel prices, are also about income inequality, populism and anti-elitism, experts say, not just about carbon taxes.

“Is it a death knell for the carbon tax or pricing carbon? I don’t think so,” economist Yohe said. “It is just a call for being a little bit more careful about how you design the damn thing.”
…

OPEC and Russia moved closer on Wednesday to agreeing cuts in oil production from next year despite pressure from U.S. President Donald Trump to reduce the price of crude.

OPEC meets on Thursday in Vienna, followed by talks with allies such as Russia on Friday. OPEC’s de facto leader, Saudi Arabia, has indicated a need for steep output reductions from January, fearing a glut, but Russia has resisted a large cut.

“All of us including Russia agreed there is a need for a reduction,” Oman’s Oil Minister Mohammed bin Hamad Al-Rumhy told reporters after a ministerial committee that groups Saudi Arabia, Russia and several other producers met on Wednesday.

Exact volumes were still being discussed, he said. The cuts would take September or October 2018 as baseline figures and last from January to June.

Two OPEC delegates said Russian Energy Minister Alexander Novak was flying back to Moscow on Wednesday to get a final agreement from President Vladimir Putin.

Saudi Arabia has indicated it wants the Organization of the Petroleum Exporting Countries and its allies to curb output by at least 1.3 million barrels per day, or 1.3 percent of global production.

Riyadh wants Moscow to contribute at least 250,000-300,000 bpd to the cut but Russia insists the amount should be only half of that, OPEC and non-OPEC sources said.

Russia’s TASS news agency quoted an OPEC source as saying OPEC and its allies were discussing the idea of reducing output next year by reverting to production quotas agreed in 2016.

Such a move would mean cutting production by more than 1 million bpd. Saudi Arabia, Russia and the UAE have raised output since June after Trump called for higher production to compensate for lower Iranian exports due to new U.S. sanctions.

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years. The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry. Trump raises pressure

Oil prices have fallen by almost a third since October to around $62 per barrel after Saudi Arabia raised production to make up for the drop in Iranian exports. Washington also gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.

“Hopefully OPEC will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices!” Trump wrote in a tweet on Wednesday.

Possibly complicating any OPEC decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.

“How can the Saudis cut substantially if Trump doesn’t want a big cut?” said Gary Ross, chief executive of U.S.-based Black Gold Investors and a veteran OPEC watcher.

“Trump is worried about the Fed and inflation. So he wants low prices now. Also if Saudis are obnoxious with a deep output cut, it will spur the Democrats in Congress to go more actively for the Nopec legislation and the withdrawal of U.S. support for the Saudi-backed forces in the war in Yemen,” Ross said.

The Nopec legislation being discussed by U.S. lawmakers could make it possible to sue Saudi Arabia and other OPEC members for price fixing.

Bob McNally, president of U.S.-based Rapidan Energy Group, said OPEC was stuck between a rock and a hard place given pressure from Trump on one hand and the need for higher revenues on the other.

“We think OPEC will try to come up with a fuzzy production cut … It won’t be called a cut but will effectively mean a cut, which will also be difficult to quantify,” McNally said.
…

A new study estimates 164 million people are migrating to foreign countries in search of work, an increase of 9 percent since 2013.

The majority of migrant workers are men between the ages of 25 and 64, according to the International Labor Organization’s second edition of Global Estimates on International Migrant Workers. While the number of migrant workers in upper-middle-income countries has grown, the report finds the vast majority head for richer countries in North America, Europe and the Arab region, particularly the Gulf States.

Manuela Tomei, director of the ILO Conditions of Work and Equality Department, tells VOA most of the people who migrate for work are low skilled, and employed in fields such as construction, agriculture, the hospitality industry or as domestic help.

She says migrant workers are a key factor in boosting the economies and development of rich countries and in the higher brackets of upper-middle-income countries.

“Their main contribution is through the work, the services that they provide to host communities in sectors and occupations, in jobs in which often nationals are not interested to work any longer,” Tomei said.

Unfortunately, she noted, the influx of migrants into foreign countries often creates a backlash. Instead of welcoming the workers as being beneficial to their societies, host communities often react with hostility.

In coming years, she said, these workers increasingly will be needed because of demographic trends and rapidly aging populations. Labor migration is a long-term trend, she added, urging governments to learn how to manage workers for their mutual benefit.
…

U.S. President Donald Trump, who rattled global markets Tuesday after declaring himself “a Tariff Man,” predicted in a series of tweets Wednesday the United States and China would negotiate a new trade deal.

Trump said China is planning to resume buying U.S. soybeans and natural gas, which he said confirms his claims that China had agreed to start “immediately” buying U.S. products.”

Trump said he believes “President Xi (Jinping) meant every word of what he said” at their meeting recently in Argentina, including “his promise to me to criminalize the sale of deadly Fentanyl coming into the United States.”

The president’s optimistic comments came one day after stock prices around the world plunged in response to a series of tweets he posted on Tuesday, warning a fragile accord between the two countries could crumble.

Stocks in the U.S., Europe and Asia fell sharply after Trump declared himself “a Tariff Man” who wants “people or countries” with intentions to “raid the great wealth” of the U.S. “to pay for the privilege of doing so.”

Trump and President Xi, leaders of the world’s two biggest economies, agreed Saturday in Argentina to not impose any new tariffs on each other’s exports for the next 90 days while they negotiate a detailed trade agreement.

White House economic adviser Larry Kudlow said earlier this week the U.S. won Chinese commitments to buy more than $1 trillion in American products.

The U.S. had a $335.4 billion trade deficit with China in 2017.

Late Sunday, Trump tweeted that “China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently, the tariff is at 40 percent

On Monday, Kudlow said there was an “assumption” that China would eliminate auto tariffs, not a specific agreement.

China’s ministry of foreign affairs said Monday the Chinese and U.S. president had agreed to work toward removing all tariffs.

The 90-day truce in the escalating trade war between the U.S. and China came during a dinner meeting between the two presidents following the G-20 summit of the world’s industrialized and emerging economies in Buenos Aires.  For months, the two countries have engaged in tit-for-tat increases in tariffs on hundreds of billions of dollars of exports flowing between the two countries.

Trump, speaking to reporters on Air Force One after the plane departed Argentina, said his agreement with Xi, will go down “as one of the largest deals ever made… And it’ll have an incredibly positive impact on farming, meaning agriculture, industrial products, computers — every type of product.”

Trump agreed he will leave the tariffs on $200 billion worth of Chinese products at 10 percent, and not raise it to 25 percent as he has threatened to do Jan. 1, according to a White House statement.

Trump and Xi also agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, according to the White House statement.
…

Vimla Yadav, a farmer from India’s Haryana state, says agriculture costs, such as fertilizers and seeds, have soared, yet produce prices have plunged, leaving her family of 10 with virtually no profit from their four-acre farm. “We don’t even get the fruits of the labor that the entire family puts in on the farm, although we slog day and night,” she laments.

Yadav is one of the tens of thousands of angry farmers from around the country who poured into the Indian capital recently, demanding a special session of parliament to discuss their demands:better prices for farm produce and a waiver by the government from repaying loans taken from banks.

The protest highlighted the deepening distress among the population in the countryside, where there is growing concern about diminishing agricultural profits because many are being driven into debt.

In a country where half the population of 1.3 billion depends on agriculture, low farm profits have long been a challenge and prompted promises by Prime Minister Narendra Modi to double rural incomes by 2022. But the growing disenchantment among the farming community could pose a challenge to Modi as he seeks re-election next year.

According to the government, the average income of a farmer is about $100 a month. But many make less, said Yogendra Yadav, one of the main leaders of the protest and founder of the farmers group Jai Kisan Andolan. The Yadavs are not related.

“For a majority of them, the income is probably less than $50 a month. That is the level at which they survive. And one of the principal reasons for that is that they don’t get enough price for their crops,” Yogendra Yadav said.

Low prices for crops are not the only problem: increasingly erratic weather patterns pose a new challenge in a country where nearly half the farmers lack access to irrigation.

 

In eastern Orissa state, for example, back-to-back droughts over the past two years have brought widespread distress.

 

“There has been very little rain this year,” said Lakhyapati Sahu, a farmer who traveled from Orissa, one of India’s poorer states. “We face a massive problem due to successive droughts.”

 

According to various studies, nearly half of Indian farmers have said they want to quit working on the land but cannot do so because of a lack of alternate livelihoods.

Despite the challenge of finding work, Parul Haldar, a farmer from West Bengal, said she wants to migrate with her entire family to the city. “I will give up farming and go to Kolkata and look for work to make a living. There is no money to be earned from the farm,” she added.

Although the rural crisis has been festering for many years, economists partly blame the deepening crisis on a sweeping currency ban that led to widespread cash shortages two years ago and affected their incomes.

 

“Many farmers lost working capital, they had to borrow money from the banks or from the local moneylenders at high interest rates, so their costs went up,” economist Arun Kumar said. “So if costs go up and revenue comes down, then income gets squeezed.”

Protests by farmers have intensified in the past two years as they try to draw attention to the usually forgotten countryside — their recent march was their fourth and largest to Delhi so far this year. They have also held marches in other cities like Kolkata and Mumbai. In June, farmers in several parts of the country threw their produce on the streets to highlight low prices. And last year, farmers from southern India protested in New Delhi with skulls to draw attention to suicides by farmers.

“Farmers are saying enough is enough, now something needs to be done,” Yogendra Yadav said. “Both the economic and ecological crisis is leading to an existential crisis, farmers are committing suicide, they are quitting farming.”

 

Political analysts also said the growing rural anger could erode support for Prime Minister Modi in the countryside ahead of next year’s scheduled elections. Farmers make up an important voting bloc.

“Opposition to Modi is growing. Unless you have rural support, no party can win on [the] basis of urban support only,” said Satish Misra, of the Observer Research Foundation in New Delhi. “The distress is real. The agriculture issue needs to be addressed in a very focused manner.”
…

President Donald Trump insists his new trade agreement with Mexico and Canada will address the exporting of U.S. manufacturing jobs overseas. That pledge, however, comes on the heels of auto giant General Motors’ announcement of the layoff of 14,000 employees in five factories in the United States and Canada.

Despite the president’s optimistic pronouncements, the General Motors announcement indicates broader market shifts in the automotive industry that are unlikely to be reversed.

General Motors justified the decision as a result of shifting economic trends that have seen consumer preferences shift away from mid-sized vehicles and toward sport utility vehicles (SUVs) and electric cars. The company said the move “is transforming its global workforce to ensure the right skill sets for today and the future.”

Those moves toward increased efficiency also include a 25 percent cut of the executive workforce.

But in Lordstown, Ohio, workers whose livelihoods have depended on jobs in GM factories struggled to understand the move.

Mid-sized autos

The Lordstown plant manufactures the Chevy Cruze, one of the mid-sized cars auto manufacturers no longer see as profitable. Trump specifically addressed the impact on the Lordstown plant shortly after GM’s decision, saying, “They say the Chevy Cruze is not selling well. I say, ‘Well, get a car that is selling well and put it back in.'”

Workers are holding on to that hope with the Lordstown plant in an “unallocated status” that leaves open the possibility of GM moving in another product. Local union leader Dave Green acknowledged that issues with the Chevy Cruze were part of an overall industry trend away from smaller cars. 

“They’re not building cars, sedans anymore, but people are still buying cars,” Green told VOA. “Part of it is that they need to be priced right and they need to be priced fair. If I can go into a dealership and lease an SUV cheaper than a Chevy Cruze — you know, most Americans want more for less. So they’re going to get the bigger, the better, the more for less and it is what it is. I think the car was priced a little out of its range.”

The 6.2-million-square-foot Lordstown plant is well-placed in the center of the country, with easy access to major highway artery Interstate Highway 80 and an infrastructure of secondary plants.

Green said 80 percent of the plant’s production is sold within a 600-mile radius. “GM would be foolish to walk away from it,” he said.

The 1,600 workers anticipating a March 2019 layoff from the Lordstown plant certainly hope that’s the case. They earn $30-40 an hour compared to the next best option in the area, $10 an hour at the aluminum factory.

Lordstown is part of the broader Warren-Youngstown, Ohio, area that once thrived on the presence of steel mill manufacturing. When those plants shut down in the 1970s and ’80s, the auto industry became the lifeblood of the local economy.

“That’s is the largest plant that we have,” said Trish Williams, owner of the Ice House restaurant in Austintown, Ohio. She has several family members and friends who have worked at the GM plant in the past and present.

“That keeps this town going. Our steel mills are gone. Our factories are gone. [Hewlitt] Packard is closed. General Electric is gone. Chrysler is gone and GM was it. GM was what kept this here — it may turn into a ghost town,” Williams said.

‘Don’t sell your house’

Trump visited Youngstown in July 2017, telling workers, “Don’t sell your house. Don’t sell your house. Do not sell it. We’re going to get those values up. We’re going to get those jobs coming back. And we’re going to fill up those factories, or rip them down and build brand new ones.”

Many residents said they do not hold Trump responsible for GM’s decision, a move that could devastate the local economy.

“The president doesn’t own GM,” waitress Lisa Miller said. “Nor can he say you can’t do this, you can’t do that. We are a free country. I believe the president will push with all his might — as we’ve already seen him doing — to keep them here and to change things, but this was something that was out of his hands.”

Just days after the GM announcement, Miller said she was already noticing a drop in sales and an end to the usual lunch to-go orders from GM workers.

Some of those workers will be able to transfer to other plants around the country based on their seniority within GM. But many workers expressed concern to VOA about the number of temporary employees — who earn far lower rates per hour — working in those plants. They are also aware of GM’s plant in Mexico that builds the Chevy Blazer, an SUV.

“Why is our plant not getting the Blazer?” asked Rebecca Zak, an 18-year veteran of the Lordstown GM plant. “Why is it being built in Mexico? It’s mind-blowing. I heard in Ramos, Mexico, they get paid $2.65 an hour.”

Zak said she sees the decision as part of a trend toward corporations enriching themselves at the expense of the worker.

“We’re the ones that build this car, we are the ones that got this company this far and who are the ones who are suffering? The worker, not corporate America. Six billion dollars in the third-quarter and they can justify laying off 14,000 people,” she said.

GM workforce

Those 14,000 people represent just 7 percent of GM’s 180,000-person workforce, a strategic shift for a company in a competitive automotive market. What remains to be seen is whether that strategic shift will include places like Lordstown.

But as Lordstown employee Dan Smith said, “Any industry is cyclical. Gas could go up to $5 a gallon and then, poof, there goes the truck-SUV market. And they’re going to need small cars. It’s something we went through, my dad’s worked there.”

Smith said he was shocked by the decision but did not entirely fault GM for operating a plant in Mexico with lower-paid labor.

“Business-wise that makes sense, but then to sell it here in the United States doesn’t make much sense for American people to buy an American car that’s built in another country,” he told VOA.

For Williams, waiting to see how the decision impacts her community and her business, the equation seemed simple.

“Smaller cars, bigger cars — they all have four wheels,” she said. “They’ve made other cars off that line — why not bring another car back?”

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