The president of the United States just threatened to destroy a private company over a business decision because he doesn’t appreciate Harley-Davidson putting their profits over his politics.
Harley-Davidson announced this week that it will ship some of its motorcycle manufacturing overseas to avoid becoming another casualty of Trump’s trade war. Unhappy with that business plan, the president threatened over Twitter to destroy a century-old company that has survived everything from world wars to great depressions. What Trump doesn’t realize, based off of his tweets, is that he is the one that drove Harley-Davidson away.
As with everything, Trump took the Harley-Davidson announcement personally. And unsurprisingly for a man who licensed his likeness to everything from bottles of vodka to mail-order steaks, he sees the multimillion dollar reordering of the massive global company as a — wait for it — branding problem. But this isn’t about marketing. It’s about manufacturing.
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
To purists, there is something sad about manufacturing the motorcycle most synonymous with America in Asia and Europe. To everyone at Harley-Davidson though, there is something more terrifying about the possibility of sales dipping further because of rising material costs and retaliatory tariffs against their products if they have to be imported into other countries.
For Harley-Davidson the decision to manufacture some motorcycles in Asia and Europe was simple. The multimillion dollar company set aside nostalgia to honor obligations to its dealerships and its stockholders. It’s a rational, no-nonsense business plan, the kind that Trump is unfamiliar with and the kind that has made Harley-Davidson a global powerhouse.
The Milwaukee company exports American muscle across the Atlantic and to the rest of the world, selling Sportsters and Street Glides everywhere from Canada to Croatia. The demand for Americana is so great that combined Harley-Davidson exports to Asia and Europe was more than half of domestic sales.
Aside from a Brazil factory opened in 1998, most of the manufacturing occurred in this country. Thanks to Trump, that’s changing.
Harley-Davidson will make motorcycles for the European market in Europe because Trump’s trade war threatens to eat into their profits. According to a report filed with the SEC, retaliatory tariffs on aluminum and steel, which just so happen to be the main materials on a motorcycle, would increase sticker price overnight by more than $2,200.
Harley-Davidson will also make motorcycles for the Asian market in Thailand because of another Trump decision. CEO Matt Levatich decided to pivot manufacturing to the Pacific after it became clear that the U.S. would be pulling out of the Trans-Pacific Partnership, a trade agreement with a bloc of 11 partner countries.
“We would rather not make the investment in that facility,” Levatich told Bloomberg last November, “but that’s what’s necessary to access a very important market. It is a direct example of how trade policies could help this company, but we have to get on with our work to grow the business by any means possible, and that’s what we’re doing.”
Read that again. Harley-Davidson doesn’t like building American motorcycles abroad. It would be better for their brand, to build every motorcycle here. But Trump’s tariffs and Trump’s decision to pull out of trade deals make that impossible. It’s not a question of branding now. It’s a simple economic question about global supply and demand and barriers to free trade.
If Trump wanted to keep Harley-Davidson in the U.S. he would have abandoned his protectionism and ended his trade war a long time ago.
