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Jul 10, 201812:23 PMInside Wisconsin

with Tom Still

What President Trump is missing in his odd feud with Harley-Davidson

(page 2 of 2)

Second, companies often react to changing government rules by doing what’s necessary to survive.

As the president ramped up his tariffs on goods made elsewhere, other nations responded in kind. In the European Union, that meant raising an existing 6% tariff to 31% — essentially, adding about $2,200 to the cost of each motorcycle made in the United States and sold in Europe.

This came after Trump’s earlier tariffs and steel and aluminum added to Harley’s raw material costs.

Already concerned by slipping sales in its home market, largely the product of an aging demographic, Harley executives responded by doing what many executives would do: They took steps to preserve sales in a growing segment of the market.

Trump’s response to Harley has been stern reminders that the company could recoup anticipated tariff losses through scheduled federal tax cuts. He also warned, “they will be taxed like never before” if the company goes ahead with its off-shore production plans.

Third, manufacturing isn’t real estate. President Trump made money largely in the real-estate business, which is unlike manufacturing in many ways. Land and buildings can’t be physically moved overseas, even if the ownership can and often is moved. Manufacturing, farming, and other sectors rely on the free movement of products across state and national borders, and tariffs can disrupt that flow.

America’s economy is growing in many ways, but the Trump-Harley dispute shows how the economy could suffer if companies are forced by government to make choices they would rather not make. Harley has survived a lot in its history — the Great Depression, World War II, mergers, acquisitions, and even its own missteps in past eras when it sought tariffs on foreign competitors. It will survive the Trump tariffs, too, but others may not.

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About This Blog

Tom Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal.

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