Harley-Davidson will move some production out of US after retaliatory tariffs

[tulc]

Harley-Davidson will move some production out of US after retaliatory tariffs

The company is shifting some production of motorcycles for European customers out of the United States to avoid EU retaliatory tariffs.

Harley-Davidson's move is some of the most direct evidence yet that tit-for-tat trade fights between the United States and other countries have consequences for American companies. Harley-Davidson said it stood to lose as much as $100 million a year.

"Increasing international production to alleviate the EU tariff burden is not the company's preference, but represents the only sustainable option," it said in a regulatory filing on Monday. Harley-Davidson's (HOG) stock tumbled 6%.

tulc(doesn't sound like "winning the trade war" President Trump said was easy to do)

 

[redleghunter]

Harley-Davidson will move some production out of US after retaliatory tariffs

tulc(doesn't sound like "winning the trade war" President Trump said was easy to do)

There will be some horse trading going as the Euro nations will be doing the same to bring their products here to the US. We already see signs of this happening with steel mills previously closed in the Obama Admin re-opening:

Georgetown Steel Mill reopens after 3-year closure

U.S. Steel to reopen dormant Illinois plant, credits proposed Trump tariffs

 

[miamited]

morning tulc,

Yes, for President Trump everything is 'easy' until you actually try to do it. It was going to be easy and immediate to get rid of the ACA. While he sadly made a couple of changes to it that likely will make insurance rates continue to climb, he hasn't even come close to getting rid of it. It's now been 18 months and as far as I can tell, after his pretty resounding defeat to try to get rid of it, he's long since given up on the issue.

We were easily going to be 'winning' so much that we'd be tired and exhausted of winning. Uhhh, I honestly don't see many 'wins' in his column. He did get a tax bill through that cut taxes for the wealthy and businesses and I can't imagine that would be hard for any 3 year old to do. He hasn't been able to stop, or even greatly reduce, illegal immigration, although I do give him credit for trying, but the issue that you're discussing here is how easy it's been. I don't think it's been easy for him to even try and the results show that even his attempts have pretty much failed.

Now we have this tariff war that he's brought upon us. I don't know, but his dogged complaining about trade imbalances doesn't really seem to have created a lot of problems for the U.S. economy. We've been rolling along at a pretty good clip for a number of years now. One of the reasons for a trade imbalance with China is that the average American has a pretty sizable amount of individual disposable income compared to the average Chinese. We can afford to buy all the myriad of things that are made in China where the average Chinese cannot afford to buy the other myriad of things made in America. So it would seem only natural to me that we will always have more imports than exports to China so long as we're the ones with all the disposable income. But, I'm not quite convinced that the trade imbalance alone is a bad thing for our economy. It doesn't seem to be reflected in any part of most American's day to day living or the operation of our economy. If our import/export balance sheet is so bad, then why do we have such a strong economy with the lowest unemployment that we've had in years.

What this sadly says to me, is that once again, President Trump doesn't understand the things that he thinks he understands. For the guy who said, "who knew healthcare could be so hard", I think he often shows very little real understanding of how economies work, and quite frankly, how a lot of other things work also.

God bless,
In Christ, ted

 

[ubicaritas]

There will be some horse trading going as the Euro nations will be doing the same to bring their products here to the US. We already see signs of this happening with steel mills previously closed in the Obama Admin re-opening:

Georgetown Steel Mill reopens after 3-year closure

U.S. Steel to reopen dormant Illinois plant, credits proposed Trump tariffs

It defeats the putative purpose of even having tariffs, however, and is ultimately bad for everyone because products will cost more due to lacking efficiency of production.

 

[miamited]

There will be some horse trading going as the Euro nations will be doing the same to bring their products here to the US. We already see signs of this happening with steel mills previously closed in the Obama Admin re-opening:

Georgetown Steel Mill reopens after 3-year closure

U.S. Steel to reopen dormant Illinois plant, credits proposed Trump tariffs

Hi RLG,

Curiously, your first story says that this has been in the works since likely August of 2017 with it officially being started with the purchase of the plant by GFG alliance in December of 2017. So, this likely has very little to do with these trade tariff goings on that only came into the picture about Feb. March of 2018. Certainly the tariffs might help them along, but they don't seem to be the reason behind the reopening of the plant. Since this particular plant was only shut down 3 years ago, it's likely that it still had fairly modern production equipment that would allow someone with a little money to pretty quickly get it back up and running. But, that was in the works clear back last year.

Also of note is that the company that is now operating the S.C. plant is not an American company, but a European company. They just might change their minds with what President Trump is now doing to embarrass the European Union. We'll see.

Now, the U.S. Steel story does give credit to the tariffs as being a reason that they think they can reopen that plant and it also was only recently closed so it wouldn't take a lot of investment to get it back up and running.

However, let's keep in mind that both of these facilities are likely only going to be employing, at full capacity, 7-8 hundred people. While that's a good thing, were these people unemployed for the last 2-3 years that the plants have been closed? Secondly, while the tariffs are told to be at least part of the reason that the second plant opened, what happens if the next administration reverses the tariffs? Surely neither of these companies are counting on their businesses operating only as long as there are tariffs in place, or that it is required that there be tariffs for them to be a money making operation.

So, I'm not sure that the tariffs had anything at all to do with the S.C. plant reopening as this has been planned long before tariffs even made the news. The U.S. Steel plant does lay some of the responsibility for its reopening on the tariffs and I'm certainly always glad to see businesses being opened but I'm just cautious that if the reason is the tariffs, that reason could disappear about as fast as it has appeared.

God bless,
In Christ, ted

 

[ubicaritas]

I watched a British documentary a while back with an interview with a former GM manager and he said what happens in car manufacturing has very little to do with Trump's tarrifs, the business decisions like that take years to happen.

 

[miamited]

Hi guys,

Then there is this: Trump threatens Harley-Davidson: If it moves overseas 'they will be taxed like never before!'

What is wrong with this man? Harley Davidson already has operations overseas and he's standing there telling Harley Davidson that if they move this operation that's being discussed here overseas that he's going to tax them like never before. What is wrong with this man?????

According to Harley Davidson's response, they are moving some production to Thailand to be closer to that market and apparently to avoid tariffs on sending those products to the Asian markets from America, if they are made in America. Sounds like a reasonably wise business decision. However, according to H-D this decision was made in the spring of 2017. Huh? How is it then because of the tariffs? But, the real issue from this article is 'how' President Trump is going to specifically and individually tax Harley Davidson separately from all other companies. Is there actually going to be a 'Harley Davidson tax' put in the U.S. federal tax laws?

Of course, the problem for President Trump is that while he's busy crowing about how he brought in steel production jobs because of his tariffs, he's now going to have to balance that with the number of jobs that may be lost in the near future because of his tariffs. Tariffs are generally, and most economists seem to agree, very rarely ever good for adjusting domestic production. It's been tried before and it has never worked out that way. Business is business, and businesses make decisions based on bottom line dollars and cents. Why he's choosing now to pick on Harley Davidson, who has long had other overseas operations, just shows what a small minded manager he is. How he believes that he can run every business by his own hand and through his personal mandates is scary.

It looks like every business in America is going to have to put in for a change to their letterheads. They'll have to add President Trump as CEO.

God bless,
In Christ, ted

 

[Yekcidmij]

Harley-Davidson will move some production out of US after retaliatory tariffs

tulc(doesn't sound like "winning the trade war" President Trump said was easy to do)

I'm just amazed that people (and supposedly many long time Republicans) think a trade war is a good thing

 

[Yekcidmij]

There will be some horse trading going as the Euro nations will be doing the same to bring their products here to the US. We already see signs of this happening with steel mills previously closed in the Obama Admin re-opening:

Georgetown Steel Mill reopens after 3-year closure

U.S. Steel to reopen dormant Illinois plant, credits proposed Trump tariffs

Yet this raises the cost of all the other producers who use steel as an input to their products. Why should we prefer the steel industry's interests over those others? And why force that preference onto the market?

 

[redleghunter]

Curiously, your first story says that this has been in the works since likely August of 2017 with it officially being started with the purchase of the plant by GFG alliance in December of 2017. So, this likely has very little to do with these trade tariff goings on that only came into the picture about Feb. March of 2018.

Or it could have more likely been venture capital given POTUS campaign rhetoric.

 

[redleghunter]

Yet this raises the cost of all the other producers who use steel as an input to their products. Why should we prefer the steel industry's interests over those others? And why force that preference onto the market?

In the short-term.

 

[redleghunter]

I'm just amazed that people (and supposedly many long time Republicans) think a trade war is a good thing

It's not. Free trade is still a conservative ideal. Problem is the free is going one way. We lost the trade war. We surrendered years ago. I guess Trump is trying to the get the old band back together again for a world tour. Let's see how it plays out. NATO European nations love the US inflow of money to their nations. Trump about told them last night the gravy train is going to end. He just threw down a trump card (no pun intended). This mini trade war will end as soon as the nations nursing on the American paps realize happy hour is over.

 

[Yekcidmij]

In the short-term.

(a) Define "short term"

(b) What evidence do you have to suggest that tariffs only raise costs in the short term? It seems that they raise costs by the tariff amount until the tariff is removed, which seems indifferent to time. I suppose you could try to argue that if US steel producers bring productions lines back up, eventually their production would drive prices back down. But it's not clear to me that this would necessarily happen. It assumes that just simply the act of producing ensures competitiveness in quality, quantity and price. But why weren't the competitive in the first place? Why think that they would be more competitive now? It seems that tariffs don't make companies automagically more competitive nor does it ensure that they produce quality products at market rates. Nor does it ensure that demand remains constant, which is might not given that input costs and downstream costs would be rising.

It would also assume that current competitors wouldn't still out compete them and either keep their market share at bay, or drive them back out. For example, one way foreign producers may maintain market share is by fluctuations in the real exchange rates as tariffs don't ensure in real exchange rates, which could simply offset any perceived benefit to tariffs. Tariffs don't overcome the economic trilemma by themselves.

Trade wars are really just a failure to understand economics.

 

[Yekcidmij]

Problem is the free is going one way.

I doubt it. If free trade were a losing proposition to one side of the exchange, then that party wouldn't do the trade. It's not clear to me that differences in tariff rates are a zero sum game benefiting one party at the expense of another. It seems to me that the losers are those nations with the higher tariffs as that is effectually a cost imposed on their citizenry to the benefit of foreigners with lower tariff rates.

Let's see how it plays out.

Let's not. If you prefer to pay higher prices and have taxes on you raised, that's your business, but why force that on everyone else just to "see how it plays out?"

NATO European nations love the US inflow of money to their nations.

And.....? You don't like the US Dollar as the world's reserve currency? It has some beneficial affects to you: lower interest rates which means lower costs of things you need like housing and transportation. It leads to lower financing costs and so higher employment and higher standards of living. But apparently you don't like the exporting dollars to meet foreign dollar demand, so by the corollary you must prefer higher interest rates and prices. If you want to pay higher interest rates and prices, why can't you just do so? Why force it on everyone else just to see how it all plays out?

 

[redleghunter]

(a) Define "short term"

(b) What evidence do you have to suggest that tariffs only raise costs in the short term? It seems that they raise costs by the tariff amount until the tariff is removed, which seems indifferent to time. I suppose you could try to argue that if US steel producers bring productions lines back up, eventually their production would drive prices back down. But it's not clear to me that this would necessarily happen. It assumes that just simply the act of producing ensures competitiveness in quality, quantity and price. But why weren't the competitive in the first place? Why think that they would be more competitive now? It seems that tariffs don't make companies automagically more competitive nor does it ensure that they produce quality products at market rates. Nor does it ensure that demand remains constant, which is might not given that input costs and downstream costs would be rising.

It would also assume that current competitors wouldn't still out compete them and either keep their market share at bay, or drive them back out. For example, one way foreign producers may maintain market share is by fluctuations in the real exchange rates as tariffs don't ensure in real exchange rates, which could simply offset any perceived benefit to tariffs. Tariffs don't overcome the economic trilemma by themselves.

Trade wars are really just a failure to understand economics.

Short term as in rates will be renegotiated.

 

[redleghunter]

I doubt it. If free trade were a losing proposition to one side of the exchange, then that party wouldn't do the trade.

And thus the raised tariffs. I'm not saying it is the best strategy but former US presidents have not been convincing enough with their charms to address trade imbalances.

 

[Yekcidmij]

And thus the raised tariffs. I'm not saying it is the best strategy but former US presidents have not been convincing enough with their charms to address trade imbalances.

I doubt trade is really imbalanced. In fact, it can't be by definition as it requires two parties to trade. It will always and necessarily be the case that Capital Account + Current Account == 0. So when we have a trade deficit we must have a capital surplus. Why don't you like capital surpluses?

 

[redleghunter]

I doubt trade is really imbalanced. In fact, it can't be by definition as it requires two parties to trade. It will always and necessarily be the case that Capital Account + Current Account == 0. So when we have a trade deficit we must have a capital surplus. Why don't you like capital surpluses?

You think there are competitive prices between markets?

 

[Yekcidmij]

You think there are competitive prices between markets?

Not sure what this has to do with the comment you quoted. It's always the case that Capital Account + Current Account == 0. So if we're running a trade deficit, then we must also be running a capital surplus. So if you think that trade is imbalanced, you must be against our capital surplus. If you want to run a trade surplus, then you must want to run a capital deficit.

 

[miamited]

Or it could have more likely been venture capital given POTUS campaign rhetoric.

Hi RLH,

I'm not clear on what point you're making about 'it could have more likely been venture capital'. Are you supposing that the money that GFG alliance used or gave over to some other party to buy the plant was venture capital? Could be, but I don't see how that would be germane to the issue at hand. The work to purchase and reopen this plant seems to have clearly begun quite a while before tariffs were laid on the table earlier this year.

I'm sure that when the plant closed down in that small SC town that there were people pushing to reopen it and apparently some company or business group took it upon themselves to reopen it. All well and good and certainly to be expected of any company that might employ a good sized number of people in any city. But that's not the point. The point is that this thread seems to be giving kudos to this having been a direct result of President Trump's tariffs and the historical evidence would seem to deny that it actually had much if anything in beginning the work to reopen the plant.

God bless,
In Christ, ted