Don't blame Har­leyDavid­son for job loss

The Charlotte Observer (Sunday) - - Opinion - BY REID RIBBLE The Wash­ing­ton Post Ribble is a for­mer Repub­li­can U.S. con­gress­man from Wis­con­sin (2011-2017).

I ride mo­tor­cy­cles. I’m par­tial to Har­ley-David­son mo­tor­cy­cles be­cause I’m fromWis­con­sin, home of the com­pany’s head­quar­ters, but also be­cause I have fond mem­o­ries of rid­ing my Har­ley with many friends, when I was a mem­ber of Congress, dur­ing the an­nual Rolling Thun­der event in­Wash­ing­ton to honor mil­i­tary vet­er­ans.

I un­der­stand Har­leyDavid­son’s re­cent de­ci­sion to move pro­duc­tion of its mo­tor­cy­cles for sale in the Eu­ro­pean Union to plants out­side the United States. It wasn’t a sur­prise - that’s what just about any com­pany would do when faced with a 25 per­cent tar­iff im­posed by the E.U. in re­sponse to Pres­i­dent Trump’s trade agenda. Com­pa­nies must be nim­ble or they lose mar­ket share, and Europe is Har­leyDavid­son’s sec­ond-largest mar­ket af­ter the United States. The tar­iff would have added an av­er­age of more than $2,000 to the cost of a Har­ley in Europe, no doubt dam­ag­ing the com­pany’s mar­ket share, which is dif­fi­cult and ex­pen­sive to re­gain. Crit­ics, in­clud­ing the pres­i­dent, none­the­less at­tacked Har­ley-David­son for its de­ci­sion.

Who is right in this de­bate? A pres­i­dent who says he wants to ne­go­ti­ate bet- ter trade deals for ev­ery­one, or a com­pany with a busi­ness to run but no say in those ne­go­ti­a­tions? Both sides have a point.

Trump needs to un­der­stand that busi­nesses seek the most ef­fi­cient and cost-ef­fec­tive­man­ner to de­liver goods and ser­vices. If they sell their prod­ucts in other coun­tries, they will try to min­i­mize ad­di­tional taxes to keep prices com­pet­i­tive. That is a ba­sic el­e­ment of trade.

The United States does not have a for­mal trade agree­ment with the E.U. Nor does it have one with China. Ab­sent for­mal­ized trade agree­ments, trade deficits are sig­nif­i­cantly like­lier to oc­cur in coun­tries with more-open­mar­kets, as in the United States. Reach­ing a trade agree­ment with the E.U., in­stead of get­ting into a tar­iff war, would ad­dress Trump’s over­rid­ing con­cern about trade deficits - and would be good for com­pa­nies such as Har­leyDavid­son. But it should be noted that, broadly speak­ing, there re­ally is noth­ing wrong with trade deficits. They send a sig­nal that con­sumers like both prod­ucts and pric­ing. They’re also ev­i­dence of su­pe­rior pur­chas­ing power - tes­ti­mony to Amer­ica’s af­flu­ence and size. Yet some smaller, less af­flu­ent coun­tries, in­clud­ing Canada, pur­chase more goods and ser­vices from us than we do from them. (Con­trary to the pres­i­dent’s deficit com­plaints, the U.S. Trade Rep­re­sen­ta­tive re­ported a trade sur­plus of $8.4 bil­lion with Canada in 2017.)

Yes, trade agree­ments pro­duce amix of win­ners and some losers. In the ag­gre­gate, each side wants more wins than losses. That’s how it works.

But the United States over­all has mostly been a big win­ner. As Bloomberg News noted in May, U.S. man­u­fac­tur­ing out­put, in in­fla­tion-ad­justed terms, “is more than twice what it was back in 1979, when man­u­fac­tur­ing em­ploy­ment peaked.”

Sure, there are fewer man­u­fac­tur­ing jobs to­day, but that’s mostly caused by au­toma­tion and Amer­i­can in­ge­nu­ity, not losses to for­eign com­pe­ti­tion. In to­day’s hot U.S. econ­omy, a short­age of work­ers, not un­em­ploy­ment, is the prob­lem.

Trump cam­paigned on fix­ing bad trade agree­ments. He fo­cused espe­cially on the trade deficit with China. In the past and con­tin­u­ing to this day, China has cheated in the mar­ket­place by dump­ing prod­ucts such as pa­per, steel and so­lar pan­els on the U.S. mar­ket to drive down prices and put com­peti­tors out of busi­ness. The pres­i­dent’s ef­forts to per­suade China to change its prac­tices are jus­ti­fi­able.

CHRISTOPHE MORIN Bloomberg

Har­ley-David­son is just mak­ing a smart busi­ness de­ci­sion in re­sponse to the fall­out from Trump’s tar­iffs.

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