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Monday, June 25, 2018

Trump Drives HOG Out Of U.S.

* See UPDATES below...

Because of President Trump's trade tariff tantrums, Harley-Davidson (HOG) may be forced to move some of its manufacturing facilities oversees in order to build its motorcycles destined for sale in the European market...thereby cannibalizing its American jobs in the process.

In Q1 of 2018, U.S. sales were -12%, while European sales were +6.8%. Additional tariffs will cost the company around $90-100 million/year if they don't make such a move.

Price has broken below several important support levels that I described in my post of March 2 and dropped over 6% today...it sits just above major price support at 40.00, as shown on the monthly chart below.

This may just be the beginning of a great migration of businesses out of the U.S. if Trump continues his hard line on trade.

Trump's former praises all done for show?

The U.S. already has 12,000 tariffs in place on a variety of goods from numerous countries, so Trump's tariffs will be piled on top of those. American consumers will pay the price of a trade war, which will end up costing the U.S. far more than any minor benefits to its producers and manufacturers, inasmuch as these tariffs are paid to the government as taxes, not to U.S. companies. So any tax relief offered to Americans by the recent 'Tax Cuts and Jobs Act' will be offset by trade war taxes, including job losses.

And, why would he want to restrict the sale of U.S. products to world markets? It makes no sense!

U.S. and world markets aren't too happy today...possibly over trade worries.

(as of 2:49 pm ET)

(as of 2:49 pm ET)

* UPDATE June 26...

And, so now the President has flipped from being a (purported) supporter of Harley-Davidson to its judge, jury and executioner...and, so, yes indeed, it was 'all done for show.'

So much for this company being hailed as an American icon by Trump...but their global brand name will continue in spite of his actions. U.S. brand origin is more important in today's international marketplace than where it's manufactured or assembled. Harley's engines (the 'heart' of their bikes) will continue to be made in the U.S.

N.B. In any event, Trump's name appears on hotels throughout the world and they're not 'made in America.' So, he's being hypocritical, narrow-minded, and regressive, in my opinion!

* UPDATE July 3...

Like I said...hypocritical...

Regardless of how much competition there is, bikers will continue to buy Harleys because...they're Harleys!

He's obviously ignorant of that fact, so he'll continue to use this American company as his latest punching bag in order to entice foreign companies into the U.S. and to force his business ideas on American companies (at their and consumers' expense). Leaders of a free and democratic country don't do that.

Who's next? No doubt, there will be plenty more to spar with and threaten, as he's already done since he took office. Watch your back...