(Bloomberg) -- The looming strike at America’s Big Three automakers leaves President Joe Biden caught between two of his top policy goals – a greener car industry and a labor revival – with little sway over the outcome. 

The United Auto Workers union says it’s ready to call stoppages if there’s no wage deal by Thursday night. Union demands and company offers remain far apart. All Biden can do is cajole both sides to avert a strike that could cost him politically. The president has “encouraged the parties to stay at the table,” his chief economist Jared Bernstein said Wednesday.

An extended shutdown at Ford Motor Co., General Motors Co. and Stellantis NV risks triggering a recession in swing states like Michigan, and rekindling inflation for car prices. More broadly, the dispute pits two of the president’s key constituencies against each other.

Biden needs the auto giants on board for his green-energy transition, and he’s been showering them with federal cash. Yet his administration also touts its efforts to empower labor, and auto unions aren’t entirely sold on the EV plan. They’re worried it will lead to job cuts and lower pay — favoring non-union companies like Tesla Inc., and shifting output to southern states that restrict organized labor. 

That’s left Biden with a tough juggling act. Unlike last year’s freight-rail dispute, he lacks legal authority to keep auto production going if the pay talks fail. The president has expressed support for key demands made by the UAW, one of the few major unions that has yet to endorse him in the 2024 election. He spoke to UAW leaders and auto executives before departing for Asia last week.

‘Damned If He Does...’

“He’s damned if he does and damned if he doesn’t,” said Kate Bronfenbrenner, director of labor education and research at Cornell University’s School of Industrial and Labor Relations. “If he gets involved and it doesn’t help, then he’ll get blamed for the strikes. If he doesn’t get involved and the strike goes on and on, he’ll be blamed for not getting involved.”

Biden has tied his reelection bid to the economy, and spent the summer highlighting job growth and wage increases. 

Even a 10-day auto strike would likely cost $5.6 billion in lost output and push Michigan into recession, according to Anderson Economic Group, a consultancy based in the state. A shortfall of new cars risks fueling inflation, Biden’s biggest economic bugaboo. And knock-on effects could spread to suppliers across the Midwest, where Biden needs support from union members — including the UAW’s 150,000 workers — to win battleground states. 

Read More: Even a Brief UAW Strike Seen Causing Billions in Economic Damage

“It’s not good for a president when there’s a big strike that affects a large region of the country, particularly a swing political region,” said Seth Harris, Biden’s former top labor policy adviser. “If it lasts for an extended period of time, there’s a meaningful risk of damage to the supply chains of the Big Three.”

Former President Donald Trump, the Republican front-runner, is seeking to capitalize on the dispute — by opening a gap between the UAW leadership, which has vowed not to endorse him, and rank-and-file members who might vote for him.

Trump’s campaign said last week that Biden’s policies will “murder” the US auto industry, and urged UAW leaders to decide whether they stand with Biden or “front-line autoworkers and President Trump.”

Earlier: UAW President Warns Biden That Trump’s EV Attacks Hit Nerve 

Friction With Fain

Trump has lost ground among industry workers, because many resent the fact they were forced to stay on the job through the pandemic with few protections, Bronfenbrenner reckons. Still, the current dispute could cost Biden some blue-collar support. The president “has been working very hard to make inroads with union workers, and workers in general,” she said. “I just don’t know how much progress he’s made.”

There’s been friction between Biden’s team and UAW President Shawn Fain. Some in the White House got frustrated with Fain, believing that the union chief was taking their efforts to support his goals for granted, according to a person familiar with the dynamic. Tensions were worse in the spring and communication has improved in recent weeks, according to another person. 

The administration has taken other steps that may indirectly influence the contract talks – by pushing carmakers to address labor concerns over the green transition. 

In a new $15.5 billion tranche of funding for the EV industry, the Department of Energy included language favoring projects with higher pay and union representation. Fain cautiously welcomed the announcement — a sharp contrast to the way he blasted the DoE in June when it lent Ford and its partner $9.2 billion to help build battery plants. “Why is Joe Biden’s administration facilitating this corporate greed?” Fain said at the time.

Biden and his team have approached previous high-profile labor standoffs, like the one at West Coast ports, by publicly backing union goals while working behind the scenes to head off strikes. In the freight-rail dispute, Biden used presidential powers to impose a settlement that fell short of some union goals.

So far, involvement in the auto talks has been more limited. Acting Labor Secretary Julie Su is monitoring the situation, and senior White House adviser Gene Sperling has been appointed as a liaison — though his role doesn’t involve actually being at the table as a negotiator. 

“We have been engaged with each of the major parties regularly for many weeks,” Sperling told Bloomberg News. “There is no substitute for the give and take of 24/7 good-faith negotiations.”

--With assistance from Raeedah Wahid, Keith Naughton and David Welch.

©2023 Bloomberg L.P.