Harley Davidson Profits Slump – This Is How Trade Wars Work Mr. Trump

As we all know every economist on the planet has been shouting that we don’t want to have a trade war. The reason being that such trade wars just make everyone poorer. Making people poorer not being known as a useful goal of economic policy. Of course, what does Donald Trump, egged on by Peter Navarro, actually go and do? Have a trade war.

The result is obvious, people become poorer:

As is said elsewhere:

Donald Trump has threatened to impose further sanctions on the EU after Harley-Davidson posted a slump in sales and profits. Last year the EU hit imports of the Milwaukee-based company’s motorcycles with tariffs of up to 31pc, which Harley-Davidson referred to as it posted quarterly figures on Tuesday. The levies were part of a package of retaliatory measures on US products after President Trump imposed tariffs on steel and aluminium exported into the US.

Sure, we can see that Harley Davidson shareholders and possibly workers have lost out here. But the people who are really harmed? The Europeans who would like to buy a Harley Davidson. They must either pay 31% more or buy some other, lesser, machine. This makes the European consumer poorer – the point economists keep trying to get over. Whatever the effect of trade tariffs upon producers it is consumers in the place imposing the tariffs who really lose out.

So, let’s walk through this sequence of events then. The US imposes tariffs upon aluminium and steel flowing into the US. This harms US consumers. The EU retaliates. Tariffs are imposed upon Harley Davidsons flowing into Europe. The losers are middle aged European males who wish to pose. Not a group there’s much sympathy for to be sure but that’s who is harmed. In response Trump declares that he’s going to make US consumers poorer again?

Note what the politicians are repeatedly doing. In order the threaten foreigners they are making their own citizens poorer in each cycle. Now do you understand why we don’t want to have trade wars?

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Q46
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Q46

As Juncker said, if Trump does something stupid we (the EU) will have to do something stupid too.

Thus are we ruled.

Joshua Wise
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Joshua Wise

Harley Davison was already bleeding profits going back the last decade. Europe has been on the decline and Asia does not have a large bike culture (at least Heavy Weight). Their forecast projects and stocks were already tanking in 2014. To say their current business despair is Trump is willfully misinformed as to their financial history. Their losses have far more to do with the aging Boomer demographic and the millennial disinterest in heavy bikes or luxury bikes.

Quentin Vole
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Quentin Vole

O/T but no sensible European biker would want a Harley (I know some do, some even own Gold Wings, but I don’t consider them to be sensible). They’re essentially a two-wheeled articulated lorry, no doubt a wonderful ride if you live in a state with a 50 mph speed limit and roads that encounter a gentle curve every 15 miles, but pretty useless in the UK and most other places in Europe.

BarksintheCountry
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BarksintheCountry

Trump’s fascination with Harley Davidson is especially interesting because its fortune is so complicated and so intertwined with demographics, changing tastes, pricing inflation and who knows what else that tariffs likely have a transient and minor impact. Plodding around the country’s steel mills talking tariffs is one thing but to get so far removed as is HD seems peculiar.

Joshua Wise
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Joshua Wise

Because it’s convenient to say Trump is trotting out an American First policy and it tanking an American icon in the process. Cosmetically it looks correct and the media trusts their base is stupid enough to never look into it for themselves.