Issue of the week: Harley-davidson’s rebels

The celebrated US motorbike-maker has defied the White House on tariffs. Will others follow suit?

“Few companies are as entwined with American culture” as Harley-davidson, which celebrates its 115th anniversary this year, said Antony Currie on Reuters Breakingviews. Think of Peter Fonda in Easy Rider or Kurt Russell in Escape from LA. Now the bikes have a “bit part” in a new political drama. Harley’s decision to move some 16% of its production overseas to avoid import tariffs set by the EU is “a symbolic, if pragmatic, rebuke” to President Trump’s “myopic trade policy”. As Harley points out, the average cost of a hog exported to the EU – its second largest market, outside America – has leapt by $2,200 because of the tit-for-tat levies. Trump, a fan of “the iconic, tough-guy brand”, has taken the news hard, said the Daily Mail. “They surrendered, they quit!” he tweeted. “The Aura will be gone.”

The president wasn’t the only unhappy one. The Milwaukeebased bike-maker’s shares fell 6% on the news – partly because Harley plans to absorb much of the initial cost of the tariffs, which it reckons will cost $100m annually, as it shifts production abroad, said Rebecca Ballhaus in The Wall Street Journal. “International business has become increasingly important to Harley as sales have fallen at home”: it already assembles bikes in Brazil and India, and plans a new plant in Thailand. Trump has suggested that Harley is using EU tariffs as “an excuse” to justify existing plans to ramp-up production overseas. But he would say that, wouldn’t he, said The Guardian. Harley’s decision is “particularly awkward for Trump”, who last year “used a White House visit from the firm’s executives to push his ‘America First’ trade policies”. The irony now is that Trump’s trade wars are putting some of Harley’s home-town jobs at risk.

Harley’s decision illustrates why protrade members of Trump’s own Republican Party are so concerned about “the multiple fronts he has opened in his trade offensive”, said the FT. “Although Europe originally appeared to be collateral damage” in the “battle with China”, the fight there has acquired its own momentum. Indeed, the breakdown of the G7 summit this month has convinced EU leaders that they must “stand up to Trump”. That’s a useful lesson for US bosses too, said Peter Eavis in The New York Times. “Corporate America has largely avoided sticking its head over the parapet in the trade war”, but that will “become harder as the bellicose rhetoric transforms into action”. Public companies will have to enter the fight, obliged as they are “to publicly quantify” their financial pain. The trade war seems to have halted the Trump rally – “and there are a lot more Harley-davidsons on the stock market”.