Harley ditches Trump as trade war begins to bite

A few months ago, US president Donald Trump was tweeting about how “trade wars are good, and easy to win”. When the US was “down $100 billion with a certain country”, he said, by way of explanation, “don’t trade anymore—we win big. It’s easy”! Except, as Trump and his supporters are finding, in an interconnected world, it’s not really that easy. If the $100 billion of extra imports into the US comprised, say, just wine and cheese, that would be one thing, though domestic consumers would protest the hike in prices following the imposition of import duties—that is why, even at the height of Chinese mercantilism, the US didn’t do much as it would have jacked up prices of everyday goods that Americans bought at a Walmart. But, when the $100 billion comprises industrial inputs, the ramifications can be quite different because US manufacturers find themselves getting less competitive as their inputs start costing more. At a hearing by a committee of the US Trade Representative last month, WSJ reported a representative of GE talking about how import tariffs may not sway Chinese decision-makers, but would hurt US companies that owned facilities in China as well as US workers who relied on these imports to make products for both the US market as well as exports. Roughly a fifth of the circuit boards and other components for GE’s scanners, WSJ reported, are imported from China.
Things get worse when other countries impose retaliatory tariffs. President Trump made headlines when he talked of, for instance, how India was charging exorbitant import tariffs on Harley Davidson motorcycles, and though Harley wasn’t protesting, he was going to fix it. Harley may not have protested because, as it turned out, Trump had been badly briefed. And, with the EU slapping high retaliatory tariffs on Harley imports from the US, the company is bleeding.