Trump Doubles Down On Harley-Davidson, Misses The Point On Protectionism
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Trump Doubles Down On Harley-Davidson, Misses The Point On Protectionism

President Donald Trump has lived his entire life in a crony-capitalist business world – not one allowed to flourish in freedom. That makes him extremely unlikely to look at trade as a game better played on the ground by free actors from all nations, not dictated from the top by bureaucrats.

When Harley-Davidson, the classic American motorcycle maker, announced it would have to take its manufacturing overseas because of the trade wars provoked by Trump, the president doubled down. Instead of going back on his decision to place tariffs on steel and aluminum imported from Europe, which prompted European officials to impose 25 percent tariffs on U.S. products, Trump threatened the company, saying it would be “taxed like never before” if they moved overseas.

Harley

But the company is in a tight spot.

Every single motorcycle would cost $2,000 more to produce if the manufacturer didn’t move overseas. This would add $90 to $100 million to the company’s overall manufacturing costs every year, which is a fortune. These costs would get passed down to Harley-Davidson customers, who would either stop buying the product or search for something less expensive. In this case, European customers would be the first ones to feel the heavy burden created by this trade war.

However, this isn’t the first time a trade war has impacted European customers in the recent past.

Trade Wars Hurt Everyone, Accomplish Nothing But More Hardship

As Ángel Manuel García Carmona explains, the European Union has engaged in this very destructive game in the name of protectionism as recently as 2017, adding a 28.5 percent increase to the overall cost of Chinese steel. This is because China was making “corrosion-resistant steel” and the European steel industry was angry with all the “dumping” of Chinese goods, so they complained.

So when European leaders criticize Trump, they do so by ignoring their own protectionist policies. Still, criticism is warranted, but not simply because Trump is the one doing it.

Protectionism appears whenever a president or administration wants to make a point that it’s fighting for American jobs and the American consumer. But what trade restrictions do is to actually hurt those they intend to help.

As artificially raised barriers make the cost of producing higher to the producers, consumers get a more expensive end product. That shifts the supply versus demand balance, making it harder for consumers to balance the budget while continuing to buy what they need and/or want. These industries then suffer, as fewer customers can afford their products. And as a result, they engage in crony capitalism, lobbying governments, and lawmakers to help them fight off the competition with even more regulation.

If Trump was sincerely concerned about American jobs and consumers, he would lower tariffs across the board, not raise them.

As economist Richard M. Ebeling said, “the best policy is to simply lower your own existing import tariffs regardless of what any of your nation’s trading partners may or may not do.” Why? Because “the country that raises or lowers its import duties injures or benefits itself much more than it injures or benefits its neighbor,” as put by Henry Dunning MacLeod and quoted by Ebeling.

Unfortunately, the Trump administration doesn’t seem to care much about liberty. So we’re willing to assume this lesson will never really get through until it is too late.

Comment section

2 thoughts on “Trump Doubles Down On Harley-Davidson, Misses The Point On Protectionism

  1. Harley has been moving out for some time The Indonesian Factory was planned in 2015 to 2016 and construction was commenced in 2017. Further Harley fraudulently blamed Trumps tax cuts as a reason they had to lay off 800 employees. If this were true every corporation in America would have had to do likewise. When a motorcycle is being sold for more money than a new automobile and the CEO says it cant be done for less – you are dealing with Corporate greed at consumer expense justifying boated costing.

    For Harley Davidson to blame any of their actions on Trump is completely disingenuous and typical of so many Leftist Globalist CEO’s in America who try to politicize their decisions in anti-Trump Rhetoric.
    A 25% tarrif on steel and Aluminum is a pitance compared to the EU’s 25% tarrif on finished products.

  2. Harley’s CEO is hardly a liberal. Harley is a Republican brand, popularized first by WI Gov. Thompson. Even Scott Walker learned how to ride for his campaign. Trump appeared with bikes and the CEO. They are members of WMC (pretty much Republican run businesses). No the CEO of Harley is a capitalist in the truest American sense. For low taxes, for economic incentives, for creating shareholder value by lowering production costs. If Harley was liberal they wouldn’t have reduced workers salaries and benefits. The plants in SE Asia were built in order to lower the costs by producing bikes closer to where they are being sold.

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