Donald Trump’s policies concerning trade have been a disaster for some sectors of the US economy. But worse, Trump’s apparent willingness to escalate a trade war with China will be disastrous for Americans and American business interests.
Trump has endorsed downgrading China’s trade status with the US, which will lead tariffs between China and the US to skyrocket. Trump’s plan to revoke China’s “most favored nation” status could lead to tariffs of more than 40%, according to one analyst. According to the Tax Foundation, a right-wing think tank, “this threatens to upend and fragment global trade to an extent we haven’t seen in centuries.”
Trump’s last term saw America’s national debt increase by 8 trillion dollars as well as having paid for a $30 billion bailout to American farmers hurt by retaliatory tariffs imposed by China.
https://www.washingtonpost.com/business/2024/01/27/trump-china-trade-war/
Donald Trump has not done American motorcycling manufacturing any favors with his bipolar attitude toward trade. His protective trade actions with almost every foreign country and his ideas about how American companies should only produce motorcycles in North America has led to reciprocal arrangements targeted at Harley Davidson in Europe, and now in India.
Without using any logic, as usual, it would seem that Trump continues to shoot first and ask questions later. American manufacturers are trying to determine the impacts of almost being forced to only manufacture in America, yet Americans continue to consistently buy fewer and fewer Harley-Davidsons, (down another 16% in the first three quarters of 2023).
If Trump decides to throw tariffs at Hero Motorcycle and TVS, it will only hurt American consumers, since there isn’t any American competition for the bikes that these Indian Manufacturers produce. Meanwhile, Trump’s myopic tirades will create further impediments to the sale of Harley-Davidson products, both domestically and abroad.
Tariff wars do not help make American-made motorcycles less expensive. With Harley’s CVO line now at $45,000, almost none of America’s younger motorcyclists can afford one, even if they wanted one, and that’s a big if in itself. Additionally, older buyers, many retiring or simply aging out of riding motorcycles, are buying used Harleys, which sell for half the price of the new models, or less.
With Trump likely coming back to power, Harley Davidson is between a rock and a hard place. It can’t manufacture overseas without incurring the wrath of Trump, for not supporting his trade policy, and with the prices it’s charging for its motorcycles it can’t compete in foreign markets. This leaves Harley Davidson needing to either completely reinvent itself, or it will continue to shrink until either insolvency or a sale of Harley Davidson occurs, most likely to an overseas buyer willing to purchase Harley at fire sale prices, while completely revamping the company from the ground up.
If Trump is re-elected U.S. consumers and firms will probably bear the brunt of a new trade war with China. If Trump ends normal trade relations Oxford Economics states that the cost to the U.S. economy would amount to $1.6 trillion annually and 700,000 lost jobs. Think about that. The U.S. only does $550 billion of trade with China, yet the effects of a trade war will cost American taxpayers twice that amount.
The following chart illustrates how much debt every American faces with the present level of national debt, as of 2023;
As for Harley Davidson, its financial results for all of 2023 will be released in two days. If they haven’t markedly improved, the slide will not only persist but increase in speed. Investors have waited and waited for Harley to figure out its issues. They won’t wait forever. Combined with a new isolationist, America First policy by Trump, it may put the last nail in the coffin of Harley Davidson.
Again, at $45,000 for its CVO line, there won’t be lines outside of Harley dealerships anytime soon.
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