There’s an irony here which has largely gone unmentioned:
U.S. President Donald Trump on Monday slammed Harley-Davidson Inc (HOG.N) after the motorcycle maker said it would move production for European customers overseas to avoid retaliatory tariffs that could cost it up to $100 million per year.
Trump said he has fought hard for the company and was surprised by its plans, which he described as waving the “White Flag.”
Harley-Davidson, the dominant player in the heavyweight U.S. motorcycle market said earlier on Monday it would not pass on any retail or wholesale price increases in the EU and instead focus on shifting some U.S. production.
So, Harley-Davidson doesn’t like tariffs and will re-arrange its operations to avoid feeling the consequences of them. Fair enough, but:
With an economic recession causing sales of all motorcycles to slide, with even Japanese manufacturers like Honda Motors (NYSE:HMC), Kawasaki, and Yamaha overestimating demand, Harley’s delicate financial condition couldn’t afford the discounting the oversupply was causing. Despite the Japanese bike makers offering to help Harley make it through the crunch by giving it technological assistance and providing tens of millions of dollar in loans to keep it going, Harley instead chose protectionism and petitioned the Reagan administration in 1982 to raise tariffs.
As it had been since the 1940s, Harley-Davidson was the U.S. bike industry, being the lone American bike maker left in the market, although Honda and Kawasaki did have a single plant each located in the U.S. But with Harley’s global market share slipping, the U.S. International Trade Commission determined that Honda, Kawasaki, Suzuki, and Yamaha had hurt Harley’s business, and advocated a tariff hike. Reagan ended up raising the tariffs from 4.4% to 49.4%, though the rates were to fall by a set amount each year thereafter, with their removal or extension decided after five years.
The article goes on to suggest the tariffs on Japanese motorbikes didn’t save Harley-Davidson, but it did give them a much needed shot in the arm.
However, Harley-Davidson staged a dramatic recovery, with sales rising so fast that after just four years it petitioned the government to lift the tariffs, saying it no longer needed protection, making this a simple success story of targeted trade protection.
I don’t know if Trump is aware of the history of Harley-Davidson and tariffs; if he is, it might explain why he’s rather annoyed with them.