Harley Davidson Is The Tip Of The Iceberg: This Trade War Is Going To Be Brutal

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Harley Davidson started out as a Trump poster child for “building things in America” a “true American icon.” All that has changed since they announced they’re moving some of their production overseas. Now he’s using emotional blackmail to deride them on Twitter for having the nerve to do so after all that he, Donald J. Trump, has done for them.

Two points to be made here. Number one, Harley Davidson was never 100% in America. They already have factories in India, Thailand, Australia and Brazil. So as usual Trump doesn’t know what he’s talking about. And as to all that he did for them the answer is that he provoked the European Union to impose retaliatory tariffs on Harley Davidson and those tariffs in turn have caused S&P Global Ratings to put Harley Davidson on CreditWatch due to feared margin deterioration and increased business risks. That’s what Trump has done for Harley Davidson.

S&P Global Ratings said EU tariffs will add so much to Harley-Davidson’s existing challenges it is putting the company’s credit rating on negative watch.

“The CreditWatch placement reflects our belief that near-term cost increases due to retaliatory tariffs recently imposed by the EU, combined with other significant headwinds, could cause margin deterioration and increase business risks over the next several years,” Primary Credit Analyst Daniel Pianki said Wednesday in a report. “We could lower our rating on Harley as a result.”

And this is just the beginning.

Trump is embroiling us in one hell of a mess in the world community with his pointless pissing contest of a trade war. The rest of the civilized world dealing in the actual reality of finance and not sound bite economics, isn’t going to put up with the dysfunction of the current administration. All our allies are jumping ship and looking to do business elsewhere. New York Times:

The president may want better deals to replace the old, “terrible” deals he doesn’t like, but so far, the rest of the world has been reluctant to negotiate new agreements with the United States. The long and growing list of tariffs, particularly those based on dubious national security grounds, has weakened the administration’s ability to form coalitions with other countries to tackle legitimate concerns, especially China’s unfair trade practices.

… America’s friends and allies believe we have become an unreliable partner, and they are now looking elsewhere. From Ottawa to Brussels to Seoul, our trading partners are fed up with the Trump administration’s tariffs, and they have given up on trying to charm President Trump or persuade him that free trade is good. To reduce their economic dependence on the United States and their exposure to a potential global trade war, they are forging trade deals that leave us out of the picture altogether.

Mexico led the way to severing economic ties with the United States. This year it entered into a duty free deal with Argentina whereby it buys 100% of its soy, wheat, and corn, at a cost of $13Billion to American farmers. That’s making America great again. Japan is not sitting still for Trump’s threatened 25% tariff on autos and auto parts, it’s biggest export. It’s signing a free-trade agreement with the European Union next month. Canada is moving on without us, formulating a new version of the Trans-Pacific Partnership which Trump backed out of last year and South Korea announced a few days ago that it’s working on it’s first ever free-trade agreement with Russia. The bottom line is that Trump thinks he’s still living in an age where our allies don’t have alternatives and they do. And by the time he walks back this trade war idiocy he’s started, if he ever does, the business will have moved on and then what?

The tone and policies of the Trump administration have even managed to bring two longtime rivals, China and Mexico, closer together. The two countries once competed head-to-head as low-cost manufacturers, with the United States as the most important market. After Mr. Trump began beating the drum for tariffs and a possible withdrawal from Nafta, Mexico’s economy minister, Ildefonso Guajardo, called a visit last year to China “strategic leverage,” saying it “sends the signal that we have alternatives” to the United States. […]

Regrettably, this leaves the United States on the margins as the rest of the world builds a new trading structure without us. Our workers, farmers and companies will be locked out of important markets. We will lose our chance to help write the rules and set standards for trade in advanced technology, such as alternative-fuel vehicles, 3-D printing and artificial intelligence. Global and regional supply chains will increasingly bypass the United States. And years of efforts by the United States to curb China’s unfair trade practices will lose critical international support.

Trump’s stupid machismo trade war is pointless and the damage from it may be permanent. Maybe it’s a price that Trump’s now-admirers will have to pay before they wake up and smell the coffee — a cup of which they will no longer be able to afford. Trump, true to form, is stiffing his followers and we’re all picking up the tab; and so will our kids and grand kids.

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