Photo credit: Giancarlo Foto
We once thought nothing could be more frightening than President Donald Trump threatening to rain down the “fire and fury” of America’s nuclear arsenal upon other nations. But the economic destruction being inflicted on American companies and their workers could be just as devastating as Trump escalates his reckless trade war against seemingly every other industrialized nation on Earth.
Every rational economist—none of which work for Trump, of course—warns that international trade wars cause widespread, unpredictable and uncontrollable economic damage to everyone. That seems true, as an early victim of Trump’s trade war is America’s iconic 115-year-old Harley-Davidson motorcycle company of Milwaukee. But don’t expect Trump to apologize for the economic damage he’s inflicting on a successful U.S. company with trade policies projected to reduce its revenue by $100 million a year.
Instead, Trump’s angry at Harley-Davidson for showing just how bad his terrible trade war is. Whenever someone exposes Trump as less than stunningly brilliant, he attacks. So, he’s trash-talking Harley-Davidson to drive down its stock and threatening to punish the company with enormous taxes “like never before.” Talk about “American carnage” reducing the U.S. to a smoldering industrial wasteland. How are Trump’s destructive economic actions aimed at Harley-Davidson pro-business or even pro-America? With friends like Trump, American industry doesn’t need any enemies.
The root of the problem is the basic problem with Trump: He is a profoundly ignorant blowhard. His solution to complicated problems is calling attention to himself with simple-minded, bombastic threats—the more extreme, the better. Listening to experts is for chumps. Trump showed he knew absolutely nothing about mutually destructive trade wars when he declared: “Trade wars are good and easy to win.”
Driving Jobs Out of America
As a far more passionate supporter of working-class Americans than any self-centered billionaire, I’m not about to argue in favor of U.S. corporations shipping jobs overseas to cut expenses. But for Harley-Davidson, it’s clearly Trump’s ill-conceived trade war driving Harley jobs out of the country instead of creating them in America. Trump started it by imposing a stiff tariff on foreign steel imports, costing American manufacturers—including Harley-Davidson—millions of dollars.
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It’s called a trade war because unilateral tariffs immediately start back-and-forth retaliation and escalation on every side. The European Union—Harley’s second largest market after the U.S.—responded with a whopping tariff on American-made motorcycles, adding $2,200 to the average cost of a bike. The only way Harley says it can survive “immediate and lasting detrimental impact” on its business from those killing tariffs is to move more production jobs out of America—exactly the opposite of what Trump intended.
And this is just the first week of mounting casualties in what could be a long and punishing economic world war that will makes it difficult to tell the winners from the losers among the bloody, dismembered remains strewn across the battlefield.
Hits Coming from Every Direction
As all sides keep escalating tariffs to punish each other, their own people get hit from every direction. U.S. companies—and farmers, too, by the way—sell fewer products abroad and make less money as exactly the same thing happens to other countries selling fewer products to the lucrative U.S. market. Meanwhile, everyone everywhere pays higher prices while earnings and jobs dwindle. The greatest danger is pushing the growing U.S. economy Trump inherited into another disastrous worldwide recession.
This is not theoretical. The last Republican president to impose high tariffs on foreign steel imports to try to create more American steel jobs was George W. Bush in 2002. Bush abruptly ended them a year-and-a-half later, but not before a tit-for-tat trade war destroyed 200,000 jobs in American businesses using steel, according to a later study. The Bush administration ended disastrously in the nation’s worst economic crisis since the Great Depression.
Here’s a scary current study for you. The Trade Partnership—the same research firm tracking those 200,000 American jobs lost from Bush’s steel tariffs—estimates Trump’s trade actions so far will destroy 16 jobs for every one job gained, creating 26,280 steel and aluminum jobs compared with 432,747 jobs lost throughout the rest of the economy.
That’s why opposition is increasing from conservative Republicans like Utah Sen. Orrin Hatch complaining about steel fabricators in his state losing contracts and delaying “multimillion-dollar investments for new manufacturing plants that employ thousands of workers;” and Iowa Sen. Charles Grassley bemoaning the total collapse of the soybean market in the Midwest. Even House Speaker Paul Ryan—a shameless Trump sycophant as his current political career winds down—opposes Trump’s unilateral tariffs on foreign goods as harmful to American workers, including those at Harley-Davidson.
Trump is counting on his working-class supporters continuing to cheer his tough talk as their jobs disappear. We’ll see about that. As the acerbic H.L. Mencken—one of the most influential American writers of the early 20th century—once observed: “Democracy is the theory that the common people know what they want and deserve to get it good and hard.”
