The last time Donald Trump sounded off about Harley-Davidson, he backed a boycott of its products and threatened new taxes on the iconic motorcycle manufacturer. Today, he saw news of Harley’s weak first quarter—revenue down 10% and profit down 27%—and, somewhat unexpectedly, rode to the company’s rescue.
For the past year, Harley-Davidson has been caught in the middle of Trump’s various trade wars. In May last year, the Trump administration imposed tariffs on imports of steel and aluminum, citing “national security.” The next month, the EU retaliated with tariffs on dozens of US-made products, including cranberries, whiskey, and—yes—motorcycles. China followed suit with a package of tariffs on US goods, including motorcycles, shortly thereafter.
Harley has suffered since. First-quarter revenue fell by 4% in Asia and 2% in Europe. Apparently in response to a segment about the effect of tariffs on the company’s latest earnings on the Fox Business Network, Trump decried the EU’s retaliatory tariffs as “unfair” and threatened to “reciprocate,” presumably with more tariffs.
(The EU’s tariffs are in fact set to rise to 56% in 2021, not 66%.)
Harley-Davidson wasn’t firing on all cylinders even before the outbreak of trade tensions, as it struggled to attract a younger, more international customer base for its gas-guzzling “hogs.” Its share price has shed about half of its value over the past five years.
When Harley’s bikes were hit with tariffs by major export markets, the company said it would shift production away from the US to keep the costs of its motorcycles down. It now intends to produce the majority of its motorcycles for European and Asian markets in Thailand by the end of 2021, the move that initially provoked Trump’s ire.
If Trump does impose further tariffs, trading may follow suit, escalating the trade war up yet another level. The sentiment behind his latest trade threat, though, suggests a more supportive stance towards Harley-Davidson. (Trump is holding a rally in Harley’s home state of Wisconsin this weekend.)
In trading today, investors weren’t quite sure what to make of the news, sending Harley’s shares up, then down, then up again. Perhaps that’s not surprising as they try to parse the impact of tariffs threatened by Trump to “reciprocate” against tariffs imposed abroad as retaliation for his original tariffs, in support a company the president once called for consumers to boycott.