Harley-Davidson Inc. motorcycles stand on display at the Tokyo Motorcycle Show in Tokyo, Japan. (Photographer: Kiyoshi Ota/Bloomberg)

Trump Tours Foxconn as Harley Trouble Rumbles Up the Road

(Bloomberg) -- After repeatedly bashing the leadership of an iconic American manufacturer this week, President Donald Trump is set to be 30 miles away from its Wisconsin headquarters Thursday to praise a Taiwanese company for bringing jobs to a state critical to his re-election.

The seemingly upside down nature of Trump’s interactions with Harley-Davidson Inc. and Foxconn Technology Group underscore the consequences of his “America First” trade policies.

It’s a short drive from Harley’s Milwaukee headquarters to the farmland where Trump is scheduled to attend a groundbreaking ceremony for an electronic screen manufacturing campus that may eventually employ 13,000. Despite their proximity, the two companies have had dramatically different experiences in dealing with Trump’s policies.

Harley, the maker of motorcycles that became symbols of American freedom and independence, said this week tariffs enacted by the European Union in response to Trump’s penalties on imported steel and aluminum would add as much as $100 million a year to its costs. That, the company said, means it must shift production outside the U.S. for machines made for EU customers. Trump lashed out.

Harley Riders Are as Politically Divided as the Rest of America

“Harley-Davidson should stay 100% in America, with the people that got you your success,” Trump tweeted Wednesday. “I’ve done so much for you, and then this. Other companies are coming back where they belong! We won’t forget, and neither will your customers or your now very HAPPY competitors!”

In a tweet Thursday, Trump seemed to inflate the best-case-scenario total for new jobs listed for the project by Wisconsin state officials and Foxconn. "Soon to leave for a big groundbreaking for Foxconn, which is building a great new electronics plant in Wisconsin. 15,000 Jobs, so great!"

Sharp rhetoric about Harley has put Wisconsin Governor Scott Walker, the owner of a 2003 Harley Road King motorcycle who has used the brand to promote his own political career, in an awkward position as he campaigns for re-election in November.

Walker, who lost out to Trump in a bid for the 2016 Republican presidential nomination, has avoided directly criticizing the president for blasting one of his state’s top companies. Instead, he’s expressed support for free trade.

Whether Trump will repeat his Harley criticisms while in the company’s neighborhood remains to be seen. If he does, it isn’t likely to play well.

Tariff Doubts

“The state pretty solidly is doubtful about tariffs,” said Charles Franklin, director of the Marquette Law School Poll.

In a survey of Wisconsin’s registered voters taken June 13-17, Franklin found just 29 percent think raising tariffs on steel and aluminum imports will help the U.S. economy. More than half -- 55 percent -- said it will hurt.

Trump has said Harley is using the tariffs as an excuse to move American jobs elsewhere, but a report Wednesday from S&P Global Ratings suggests otherwise. The ratings company said Harley’s corporate credit rating may be cut as the company faces risks from an emerging U.S.-EU trade war, raising the company’s costs and possibly leading to declining retail sales and shipments.

Phil Levy, an adjunct professor of strategy at the Kellogg School of Management at Northwestern University, said other companies are likely to follow Harley.

“A global business like Harley-Davidson must respond to changing market conditions if it is to stay competitive,” he said. “We are likely to see more such business moves as the administration expands its protectionist policies.”

Trade Dispute

Foxconn, which is China’s largest private employer, is sensitive to any escalation in the trade dispute between the world’s two biggest economies. Among other moves, Trump is backing legislation under consideration in Congress to strengthen the Committee on Foreign Investment in the U.S., or CFIUS, designed to give foreign investments in U.S. companies greater scrutiny to prevent intellectual property theft.

Trump is almost certain to celebrate Foxconn as a win for his efforts to lure jobs to the U.S. But that doesn’t appear to be an easy sell to Wisconsin voters.

The Marquette survey found they’re skeptical about the payback from the $3 billion the state has promised to provide in assistance.

Just 40 percent said they think Foxconn will ultimately provide as much economic payback as the state is investing in the project, while 46 percent said taxpayers are spending more than the plant is worth. A 56 percent majority do see the project substantially improving the Milwaukee area’s economy, even if they don’t expect much benefit in their own area.

2020 Plans

Public perception of the massive deal is certain to play a critical role for Trump’s 2020 re-election plans in Wisconsin, where he beat Democrat Hillary Clinton in 2016 by just 1 percentage point.

Walker, who personally lobbied Foxconn Chairman Terry Gou for the factory and stood by Trump’s side in the White House’s East Room when construction plans were announced 11 months ago, faces an even more urgent referendum because he’s on November’s ballot.

The state tax breaks and other incentives represent what Walker has called the largest economic development project in Wisconsin’s history. In exchange, the company has promised to create jobs with an average salary of nearly $54,000.

If both sides deliver fully, the economic package for Foxconn, which is best known for its role assembling Apple Inc.’s iPhones, would cost roughly $230,000 per job.

Showing some defensiveness about state assistance and other questions that have been raised about the project, Walker’s office has released a series of memos this week entitled “Foxconn Myth vs. Fact” that have also called the project the “largest corporate attraction project in U.S. history” as measured by jobs.

Neither Tom Evenson, Walker’s communication’s director, nor the governor’s press office responded to emails seeking comment.

Democrats are trying to boost skepticism about the deal, tie Walker to Trump, and link both men to the proposed U.S. job losses at Harley. Eight Democrats are competing ahead of an Aug. 14 primary to win the right to challenge Walker.

“Walker is afraid to stand up to Donald Trump, but he also owns this mess as much as Trump does,” T.J. Helmstetter, a spokesman for the Democratic Party of Wisconsin, said in a statement.

On Thursday, Wisconsin Democrats unveiled a series of video clips from the 2016 presidential primary, when Trump repeatedly trashed Walker and a variety of things in Wisconsin.

When the Foxconn agreement was announced, it was viewed as a huge political boost for Walker. But with just more than four months until the election, his approval rating in the Marquette poll was only narrowly above his disapproval rating, 49 percent to 47 percent.

Trump’s rating in Wisconsin is in worse shape than Walker’s, with 44 percent in the poll approving the job he’s doing and 50 percent disapproving, similar to his numbers nationally.

Trump is in better shape with Wisconsin Republicans, with 83 percent of Republicans and those who lean that way viewing his job performance favorably. Walker, Franklin said, needs to be careful not to alienate that group while trying to appeal to at least some non-Trump voters. “That’s the dilemma for him,” he said.

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