By: Bloomberg View
As one Trump administration trade policy backfires, another looks set to.
On Monday, Harley-Davidson said it would shift some production out of the U.S. in order to mitigate the impact of European Union tariffs targeting its motorcycles. Those penalties - which Harley-Davidson estimates may cost it as much as $100 million annually - were in response to U.S. levies on steel and aluminum imported from the EU. Meanwhile, the Treasury Department is reportedly planning to aim a bazooka at a Chinese takeover problem that doesn’t really exist anymore by declaring a national economic emergency. What’s more troubling is a reported plan to crack down on exports of key U.S. technologies.
That Harley-Davidson is among the first out of the gate with a warning on higher costs is a black eye for President Donald Trump, who last year thanked the company for “building things in America.” House Speaker Paul Ryan also traveled to a Harley-Davidson plant in his home state of Wisconsin to tout the benefits of the tax overhaul. EU lawmakers clearly knew what they were doing when they announced surgical counter-tariffs on American products. Keep an eye on manufacturers of blue jeans, peanut butter and bourbon.
Harley-Davidson wasn’t perhaps the best exemplar of American manufacturing for either Trump or Ryan to hold up in the first place. It already operates facilities in Brazil and India and is building a plant in Thailand, partly in response to Trump’s decision to pull out of the Trans-Pacific Partnership.
Harley-Davidson’s situation is symbolic of the kind of disruption threatened by the Trump administration’s protectionist agenda. General Electric Co. is also reportedly exploring changes to its supply chain as it grapples with tariffs on parts that are produced at company-owned factories in China but shipped back to U.S. assembly facilities in places like Florence, South Carolina, and Waukesha, Wisconsin. These ripple effects are important to keep in mind as Trump turns his attention to barring Chinese investments in the U.S.