Harley-Davidson Is an Early Casualty of Trade War
The Harley-Davidson Inc. logo is seen on the fuel tank of a motorcycle on display at the Oakland Harley-Davidson dealership in Oakland, California, U.S. (Photographer: David Paul Morris/Bloomberg)

Harley-Davidson Is an Early Casualty of Trade War


(The Bloomberg View) -- In a speech to a joint session of Congress shortly after his inauguration, President Donald Trump praised Harley-Davidson, the storied motorcycle manufacturer, as a great American company — the kind he most wanted to see succeed. Less than two years later, he is threatening to punish the firm for doing its best to survive his policies.

This absurd turn of events is no accident. It’s the logical consequence of Trump’s entirely illogical approach to trade.

The mistakes began with the president’s tariffs on steel and aluminum. These rested on a patently false justification: that excessive imports of those metals threatened national security. The tariffs wounded Harley-Davidson, and many other similarly situated U.S. firms, in two ways: They raised the price of imported inputs, and they provoked U.S. trade partners to retaliate.

The European Union has announced tariffs on Harley’s U.S.-made products, rendering them uncompetitive in EU markets. The company has said it will therefore move more of its production bound for Europe offshore. An embarrassed Trump is accusing the firm of cowardice and threatening that Harley “will be taxed like never before.”

Moving production abroad to remain competitive was a well-established trend at Harley and many other U.S. companies before Trump’s tariffs. But the trade war the president thinks he can win certainly won’t help keep Harley’s American workers employed. The administration is looking next at tariffs on imports of European cars. If they go forward, expect further retaliation — and a worsening, lose-lose cycle of shrinking trade, diminished U.S. competitiveness, disrupted supply chains and ruined investment plans. U.S. workers and consumers won’t be spared.

Harley-Davidson’s predicament has been especially awkward for a president who wanted to associate himself with the firm and its customers — but bear in mind it’s just one company. Trump’s misguided approach to trade will put many other U.S. producers, famous and not so famous, in exactly the same quandary. The more the president escalates this fight, the more damage he is bound to do.

The president ought to stop his trade-war nonsense before it goes any further — preferably before he finds himself applying sanctions to the very companies he meant to champion.

©2018 Bloomberg L.P.

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