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Harley Davidson and the Trade War

By Tyler Bauer

I’ve written a good bit about tariffs and their effects on businesses such as Harley-Davidson in the past. If you need to refresher, just click here or here.

On Monday, Fox News Research tweeted some information regarding the effects of tariffs on steel and aluminum on American motorcycle manufacturer Harley-Davidson. In this tweet, it was said that Harley-Davidson will incur an additional $45-$55 million of increased costs during this year. In 2019, these costs are expected to reach $90-$100 million. According to Fox News Research, the increase in costs is due to tariffs on imported steel and aluminum, as well as retaliatory tariffs placed upon American goods by the European Union.

Understandably, the people at Harley-Davidson aren’t excited about the prospect of taking on greater costs. What many people fail to realize is that, for the most part, companies don’t incur costs – they pass them on to consumers. This is exactly what I expect Harley-Davidson to do, especially since these increased costs will apply to every motorcycle. If increased costs only applied to a handful of motorcycles, Harley-Davidson may be willing to incur the cost. However, the fact that tariffs make the production of all motorcycles more expensive means that consumers will now be paying more for all Harley-Davidson motorcycles.

As usual, President Trump refused to acknowledge the adverse effects of his own policies. Instead, President Trump announced his support for a boycott of Harley-Davidson products. President Trump tweeted, “Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move! U.S. will soon have a level playing field, or better.”

Harley-Davidson’s intention to move some manufacturing overseas stems from the retaliatory tariffs placed upon American goods by the European Union. In an effort to continue selling to their European market, Harley-Davidson plans on moving production of Europe-bound motorcycles overseas to avoid tariffs. Otherwise, each Harley-Davidson motorcycle exported to the EU would cost an additional $2,200.

The solution to this dispute is simple. If President Trump wants to keep the backing of American businesses like Harley-Davidson and keep their manufacturing in the United States, he should aim to reduce tariffs, not raise tariffs. Unfortunately, President Trump doesn’t seem to realize that the solution is so simple. Instead, he has doubled down on his trade war, and I expect him to continue to do so in the future.

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