Trump’s Tariff Problems Are Entirely of His Own Making
Earlier this month, to the consternation of economists, business leaders, lawmakers and just about anyone else who weighed in on the issue, President Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from Canada, Mexico and the European Union. America’s third, fourth and number-one trade partners, respectively, were incensed, and all three immediately announced retaliatory tariffs. Included in the $3.2 billion bundle of new tariffs the EU would place on the United States was a five-fold increase in the tariff on Harley-Davidson motorcycles imported from America.
Coming as a surprise to no one but the president, the Wisconsin-based auto manufacturer announced on Monday its plans to move some of its production overseas to cope with the added cost. Trump was none too pleased, tweeting his disappointment that the company was “the first to wave the White Flag.”
Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse – be patient! #MAGA
— Donald J. Trump (@realDonaldTrump) June 25, 2018
Trump wants Harley-Davidson to “be patient” because he anticipates the EU will cave and remove the tariff in some sort of show of economic fealty to the United States, similar to how Mexico will “in the end” pay for the president’s proposed $25 billion border wall. Harley-Davidson has shareholders to worry about, though, so unfortunately it wasn’t able to follow Trump blindly into a misguided trade war, the implications of which the president doesn’t appear to understand. In its filling to the SEC announcing the plan to move some of its production out of the United States, Harley-Davidson wrote that the tariff on bikes going to Europe is now 31 percent (up from 6 percent), amounting to an additional cost of $2,200 per bike. The company has no choice but to shift production – and likely jobs – overseas.
On Tuesday morning, Trump revved up the Twitter machine once more, writing at length about how the company is using the tariff as an excuse, how he “chided” the company about tariffs in India being too high and how “it won’t take very long” for everything to “even out.” After taking a quick break to tweet an endorsement of South Carolina Governor Henry McMaster, Trump threatened to tax Harley-Davidson “like never before!”
A Harley-Davidson should never be built in another country-never! 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! The Aura will be gone and they will be taxed like never before!
— Donald J. Trump (@realDonaldTrump) June 26, 2018
This is all Trump’s fault, of course, and it’s not only Harley-Davidson that has been hit by the numerous trade wars the president has instigated. The Missouri-based Mid Continent Nail Corporation was forced to lay off 60 out of 500 employees after Mexico’s retaliatory tariff on steel threw its manufacturing costs out of whack. According to the Wall Street Journal, the company expects to lay off 200 additional workers while it waits for a tariff exemption. The Journal cites a recent report by the Trade Partnerships Worldwide that estimates that Trump’s steel and aluminum tariffs will result in a net loss of over 400,000 American jobs over the next three years.
The tariffs could also hurt Republicans come November. Harley-Davidson’s primary manufacturing plants are in the battleground states of Pennsylvania and Wisconsin, and retaliatory tariffs imposed by the allies Trump has waged trade war against stand to hurt the job market in several other swing states, including Ohio, Iowa and Missouri. “This is further proof of the harm from unilateral tariffs,” House Speaker and Wisconsinite Paul Ryan said after Harley-Davidson’s announcement on Monday. “The best way to help American workers, consumers and manufacturers is to open new markets for them, not to raise barriers to our own market.”
Republican Senator Ben Sasse wasn’t as diplomatic, calling the tariffs “stupid.” Both Ryan and Sasse, along with several other GOP lawmakers, criticized Trump’s decision to impose the tariffs at the beginning of the month.
Ben Sasse: “This will go over like a Vespa at Sturgis. The problem isn’t that Harley is unpatriotic – it’s that tariffs are stupid. They’re tax increases on Americans, they don’t work, and apparently we’re going to see more of this.”
— Kyle Griffin (@kylegriffin1) June 25, 2018
Despite the president’s insistence that everyone “be patient,” it’s becoming increasingly difficult to discern where “America First” fits into Trump’s trade policy. If Republicans don’t figure it out soon, they could be feeling it at the polls this fall.