Trump Undermines Himself on Trade
America's president seems utterly convinced that a trade war would be good for the US (and presumably for him politically). But his behavior on trade may quickly also become counterproductive, for three reasons.
WASHINGTON, DC – US President Donald Trump recently launched a tirade against Harley-Davidson, the iconic American manufacturer of motorcycles. The cause of his outburst – accompanied by threats to impose taxes “like never before” on the company – was the news that Harley plans to invest in new manufacturing operations outside of the United States.
The company’s reasoning is straightforward and compelling. Trump has threatened to raise tariffs on imports from Europe, and some of those higher duties are already in place. The Europeans, in response, are imposing higher tariffs on imports from the US, such as motorcycles (as well as bourbon, orange juice, and playing cards). Harley-Davidson would like to avoid those extra European taxes – and it can do that by locating some of its production in places not subject to such high European tariffs.
Trump’s anger is thus misplaced and unfair: he forced the company’s hand. But his behavior on trade may quickly also become counterproductive, for three reasons.