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Jacob Maslow
Jacob Maslow
Articles (144)  | Author's Website |

Trade War Intensifies as EU Threatens to Put Tariffs on Harley-Davidson, Levi's

EU is determined to react in kind to any tariffs

March 07, 2018 | About:

President Donald Trump's proposed tariffs on steel and aluminum are impacting the stock market.

Last week, the president announced his administration's intention of imposing a 10% tariff on aluminum and a 25% tariff on steel imports, sparking fears of a trade war.

In a Tweet, Trump shared his view on the potential trade war: "When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!"

While the administration may exempt allies from the tariffs, other countries are starting to retaliate.

The European Union has prepared a list of U.S. products that would have tariffs imposed on them. EU Trade Commissioner Cecilia Malmstrom said the list includes "certain types of bourbon" as well as peanut butter, cranberries and orange juice. She said the full list of items will be released to the public soon.

A major U.S. company the EU could potentially target is Harley-Davidson Inc. (NYSE:HOG).

Shares of Harley-Davidson were down 1.22% on Wednesday and 4.47% between March 1 and March 7. The company has been known to find loopholes around tariffs, often opening plants in countries such as Thailand, which has a 60% import duty on motorcycles.

Analysts fear Harley-Davidson, which is trying to expand further into the EU as motorcycle sales continue to decline, would be hit hard by a trade war. The company's stock has slid 23% since March 2017 and faces an even higher risk of decline if tariffs are imposed.

Levi Strauss & Co., a private company, is also being targeted by the EU.

On Monday, Trump countered the EU's response with more threats.

"If the EU wants to further increase their already massive tariffs and barriers on U.S. companies, we will simply apply a tax on their cars," he said.

The comment impacted European carmakers. Daimler AG (XTER:DAI) shares were down 0.10% in early morning trading on Wednesday.

Other effects

In addition to Europe, Mexico, Japan and Brazil have all threatened to consider retaliatory measures if Trump goes ahead with the tariffs.

Republicans and Democrats alike are concerned a trade war will cause the cost of living to rise for families across the country as the prices of goods will rise. This could result in a net loss of 146,000 jobs or more in the United States.

A trade war could also harm the U.S. dollar, with currency markets responding negatively. George W. Bush and Bill Clinton both imposed tariffs, which caused the dollar to suffer a 15% decline. Capital flow declines are also expected to be a significant risk, causing the dollar to fall in value.

U.S. stocks were down on Wednesday following the announcement Gary Cohn, a free trade supporter and top economic advisor, has left the White House after voicing his opposition to the tariffs.

White House press secretary Sarah Huckabee Sanders said on Wednesday Trump is expected to sign off on the tariff plan by the end of the week.

About the author:

Jacob Maslow

Jacob Maslow is a writer who began his career as a payroll manager. The same affinity for numbers that originally led him to an early career in accounting now comes in handy when it comes to understanding and working with marketing analytics.

A native of New York, Maslow is now based in the Middle East, where he lives with his wife and five children and provides high-quality services to clients in a variety of industries, including the legal, medical and financial sectors.

In addition to his marketing and consulting work, Maslow has founded a variety of news websites, including Legal Scoops. He is a frequent contributor to a variety of publications including business.com and business2community.com.

Visit Jacob Maslow's Website

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