It’s hard to think of a more American company than Harley-Davidson, the Milwaukee-based motorcycle maker. Anybody who has ever seen a Harley—or, more likely, heard one—knows it has a sturdy and uniquely American style. The company’s motto: “All for freedom. Freedom for all.” So you might expect an American president with an America First philosophy and a pro-business outlook to be a Harley booster. But we live in unexpected times, and you would be wrong when that president is Donald Trump.
The dust-up began on June 25 when the company announced it would move some of its operations out of the United States in order to “mitigate the impact of retaliatory EU tariffs”—tariffs that our European allies imposed in response to Trump’s tariffs on steel and aluminum. Europe’s new motorcycle tariffs were expected to cost Harley as much as $100 million a year.
Now, it’s possible the company is exaggerating the role played by the EU tariffs, which went into effect only a few days before the announcement and could well be short-lived. It’s just as likely that the company had already decided to move some operations overseas—where the market for motorcycles is growing faster than it is in the United States—and the tariffs offered a convenient excuse. Either way, Harley was making a reasonable decision.
It seems to have offended President Trump, however. In a series of tweets over three days this week, the president unloaded on Harley-Davidson as though it were a CNN anchor. Trump wrote: “Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. . . . Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end—they surrendered, they quit! . . . We won’t forget, and neither will your customers or your now very HAPPY competitors!” Trump counseled Harley to “be patient”—which is easy to say when it’s not your millions on the line.
Sympathetic observers have defended the administration’s tariffs as getting tough to protect American interests, as a timely boost to neglected U.S. industries, and as a negotiating posture to gain leverage. Even if one grants the validity of the protectionist viewpoint, however, the Harley-Davidson example reminds us that tariffs have serious costs. Penalties on imported products mean American companies which buy those products have to pay more for them, and they pass the costs on to consumers. Those penalties also provoke foreign trading partners into retaliating, and so domestic companies get hit from the other direction, too. Harley-Davidson is simply behaving rationally.
The motorcycle business is a tough one. Sales in the United States have been in decline for years. Competition from Honda, Suzuki, and Indian Motorcycles is intense. Managing global supply chains is a hugely complex undertaking.
Trump did a great service to U.S. companies last year by bringing our corporate taxes in line with global norms. He can build on that success by allowing Harley and other U.S. businesses to make their own decisions rather than subjecting them to Twitter shakedowns whenever he sees a headline he doesn’t like.
