In response to Trump's tariffs on steel and aluminum imported from the European Union (EU), the EU has retaliated by imposing tariffs of a variety of American exports from whiskey to motorboats and motorcycles.
Companies that want to do business in Europe have a choice: they can either raise prices to compensate for the retaliatory tariffs, or they can shift production to Europe where there will be no tariffs.
Harley-Davidson has decided that shifting production overseas is their best bet.
The maker of the iconic American motorcycle said in a regulatory filing Monday that EU tariffs on its motorcycles exported from the U.S. jumped between 6 percent and 31 percent, which translates into an additional, incremental cost of about $2,200 per average motorcycle exported from the U.S. to the EU.
"Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally," the company said in prepared remarks. "Increasing international production to alleviate the EU tariff burden is not the company's preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson."
Harley may be the first but I'm sure they won't be the only company to shift production overseas to bypass Trump's trade war. There's no indication Trump is going to back down and every indication that he intends to escalate.
Trump has ordered his trade representative Robert Lighthizer to draft plants for imposing tariffs and taxes on virtually everything we import from China and he's ordered the Commerce Department to draft plans for imposing tariffs on European cars.
And speaking of China and Europe, Chinese and EU officials have been negotiating a multilateral trade pact for several years, but officials say they intend to accelerate their plans now to protect global commerce and trade from Trump.
“I feel really we are making progress… both China and the EU believes in multilateralism and a rules-based world order,” Jyrki Katainen, vice-president of the European Commission, told CNBC's Eunice Yoon on Monday.
“We decided that, in a couple of weeks’ time, the EU and China will exchange market access offers on (the) investment agreement,” Katainen said, adding that this will be presented at a summit in the coming weeks.
It's really quite maddening to see our isolation coming from a mile away knowing just how fruitless it will be for us.
This will have very serious long-term consequences for the United State even after Trump is long gone. He's going to put us on a path of permanent decline and isolation that we may not crawl out of it in our lifetimes. And I feel like I'm actually sugar-coating it by putting it that way.
If the young kids of today understood even half of what their grandparents have done to their future, to say nothing of climate change, they would hate the old people already.
At least they'll be great again.