Harley-Davidson CEO Matt Levatich may be an unlikely sacrificial-lamb CEO for the Trump presidency, but that won’t change how things go down in the wake of the “hog” maker’s decision to react to Trump’s trade war by moving more U.S. production overseas.
The bottom line seems to be that, in the service of his wider effort to adjust the scales of global trade in America’s favor, President Trump will gladly risk the support of Levatich and even allow the nascent tariff war to badly nick one of the best “made-in-America” manufacturing stories of the last generation.
So President Trump was wielding wild tweets on Tuesday in his typical fashion, attacking Levatich’s decision to move more motorcycle output to other countries in the wake of retaliatory tariffs against Harley by the European Union—and threatening the White House’s own retaliatory actions against the company.
“A Harley-Davidson should never be built in another country – never!” the president tweeted. Harley’s “employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end – they surrendered, they quit! The Aura will be gone and they will be taxed like never before!”
“A Harley-Davidson should never be built in another country – never!” – President trump
That’s quite a heap of burning coals for a U.S. president to dump on any CEO, much less one whom he invited to the White House in early 2017, along with union leaders. Back then, he praised Levatich and others at the company for “building things in America” and for representing “a true American icon, one of the greats.”
But also at that meeting nearly 18 months ago, the president provided some clues about how he might react later if push came to shove regarding his trade policies.
Trump began the public part of the meeting with mention of the “shocker” that his campaign had pulled off by winning Wisconsin on election night in 2016 and, at the end of the meeting, thanked the assembled union reps on behalf of their members in Wisconsin, Pennsylvania and Kansas, many of whom voted for Trump. About one-third of Harley, based in Milwaukee, workers in the United States are unionized.
Today, those Harley workers are poster children for President Trump’s “Make America Great Again” sentiments. And while they labor to churn out expensive motorcycles for their employer in plants across Flyover Country, many of them are ultimately more loyal to their pocketbooks—and maybe to Trump. Harley has been stoking their concerns by steadily establishing and moving production overseas already, in places such as Thailand, Brazil, India and Australia.
So unfortunately for Levatich, he’s getting caught between the impulses of Trump the Nativist Politician and Trump the Master Negotiator.
Trump had warned Europeans that he would force them to even up the rules when it came to trade practices; then he slapped steel and aluminum tariffs on them to reinforce the point. Predictably, they countered with their own specific tariff actions against American sectors and companies, and Harley-Davidson was one of their targets. (And, yes, Europeans know American politics too!)
Actually, Levatich could really use a break right now instead of another headache. Even amid a booming economy with disposable income rising in America, Harley-Davidson hasn’t been able to get out of its own way in two facets of its business.
First, its bread-and-butter baby-boomer market is shrinking as older hog riders retire from what, physically at least, is more of a young person’s game.
And, second, despite its best efforts with lighter bikes and even experimenting with electric hogs, Harley hasn’t been able to attract anything like the portion of millennial consumers that it needs to fuel its future. Harley-Davidson’s problem in attracting younger buyers to its particular kind of transportation is like the auto industry’s challenge with millennials—only turbocharged.
The biggest fallout from Harley’s generational challenges is that U.S. sales are flagging. Meantime, its sales in most other parts of the world are growing. Getting closer to those eager customers, avoiding other countries taxes and tariffs, and making the supply chain easier is the main reason Levatich has been favoring output overseas already.
Ironically, President Reagan saved Harley-Davidson in the 1980s with a big tariff gambit. But always with a wider eye to his political base than to CEOs who employ many of those people, Trump may be willing to allow tariffs to inflict a significant amount of short-term damage on Harley by taking today’s game of chicken much further.
Only Trump has an idea of just how far he will go before the damage to Harley, to its American workforce—and, thus, to people who are at the heart of his base—may force him to pull up. But it’s going to be an unpleasant ride for Matt Levatich in the meantime.