Harley-Davidson’s Production Shift to Europe Boomerangs on Trump Administration’s Protectionist Trade Policies

Published in Maeil Business Newspaper
(South Korea) on 27 June 2018
by (link to originallink to original)
Translated from by Myung Jeon. Edited by Helaine Schweitzer.
A trade war led by President Donald Trump’s administration has boomeranged, with an American company deciding to move some of its operations abroad. U.S. motorcycle manufacturer Harley-Davidson announced that it would relocate some production to Europe to avoid retaliatory tariffs recently enacted by the European Union. The bike maker estimates its tax rates will rise from 6 percent to 31 percent when the European bloc puts its levies in place. The company said an incremental cost of about $2,200 per motorcycle sold in Europe would add up to $100 million a year.

In 2017, Harley-Davidson sold nearly 40,000 bikes in Europe, which accounted for one-sixth of its global sales, making the continent its second most important market after the U.S. With its domestic sales slumping and overseas sales growing by 10 percent annually, the iconic motorcycle manufacturer appears to have been forced to make a business decision to move some of its production abroad to keep prices competitive in overseas markets.

Lamenting that the U.S. has been ripped off by other nations, President Trump has been bombarding its major trade partners, such as China, the EU and South Korea, with indiscriminate tariffs. When faced with a 25 percent and 10 percent levy on their steel exports to the U.S., respectively, China and the EU responded with retaliatory measures: Beijing placed tariffs on U.S. agricultural imports, and the EU duties specifically targeted motorcycles and bourbon, among other things. In response to the new tariffs on U.S. exports, Trump warned of an additional 10 percent tariff on about $200 billion worth of Chinese imports, and threatened even more tariffs on European autos. It is worrisome as to where this game of economic chicken, with neither player willing to back down, is heading because South Korea, whose economy is heavily trade-dependent, is likely to be seriously hurt by these tariff wars between the U.S. and its trade partners.

President Trump condemned the bike maker’s decision in a tweet for being “the first to wave the White Flag,” although it would end up not bearing the EU tariff burden. However, Trump’s trade approach, too, is on the chopping block: A flood of warnings that Trump’s trade war would spark a global economic slowdown seems to urge the Trump administration to tread carefully sooner rather than later. Agustín Carstens, the general manager of the Bank for International Settlements, expressed concern that an increase in protectionist measures could trigger a downturn in the global economy. Moreover, economists have warned that the U.S. protectionist moves could reduce the country’s growth rate by a 0.3 to 0.4 percentage point. The U.S. should face up to the possibility Trump’s trade war will take unexpected turns, and will end up being a double bind that could not only hurt the American economy but cause a global economic slowdown.


트럼프 보호무역정책에 부메랑 된 할리데이비슨의 유럽행

도널드 트럼프 미국 행정부의 무역전쟁이 마침내 미국 기업의 국내 생산시설을 해외로 이전하는 부메랑 같은 사태로 번졌다. 미국의 오토바이 생산업체 할리데이비슨은 EU의 관세보복을 피하기 위해 일부 생산시설을 유럽으로 이전키로 했다고 밝혔다. 할리데이비슨은 EU로 수출할 때 6%의 관세를 부담했는데 보복관세 땐 31%로 오른다는 것이다. 오토바이 1대당 2200달러의 추가 비용으로 2019년부터는 한 해 1억달러에 달한다는 계산이다.

지난해 EU 수출물량은 4만여 대로 세계 판매량의 6분의 1인데 미국 다음의 중요 시장인 데다 국내 판매는 정체인 반면 국외 판매는 매년 10% 이상 증가세이니 수출가격 경쟁력을 유지하려면 이런 결정을 내리지 않을 수 없다는 것이다. 트럼프 대통령은 중국, EU, 한국까지 포함한 주요 교역국을 향해 미국의 일방적인 피해 운운하며 무차별 관세폭탄을 퍼붓고 있다. 중국, EU 수입 철강 등에 각각 25%, 10%의 관세를 물리자 중국은 미국산 농산물 등에, EU는 오토바이, 버번위스키 등에 대한 보복관세로 맞섰다. 이에 트럼프 대통령은 2000억달러 규모의 중국산 제품에 10%의 추가 관세를 매기겠다고 경고한 데 이어 EU 국가들이 미국으로 수출하는 자동차에도 고율 관세를 더 부과할 것이라고 위협했으니 서로 죽자는 치킨게임 대결이 대체 어디까지 갈지 걱정이다. 주요 교역국들 간에 벌이는 관세폭탄 전쟁으로 무역 의존도 높은 우리에게는 치명적인 불똥이 튈 수밖에 없기 때문이다.

트럼프 대통령은 할리데이비슨의 결정에 대해 트위터로 결국에는 EU로 수출하는 데 관세를 물지 않을 것인데 가장 먼저 백기투항했다며 비판했다. 하지만 트럼프발 무역전쟁이 세계 경기 침체를 촉발할 것이라는 쏟아지는 경고를 보면 트럼프 행정부가 빨리 이성을 되찾아야 할 것 같다. 아구스틴 카르스텐스 국제결제은행(BIS) 사무총장은 보호무역조치 증가가 경기 침체를 일으키는 방아쇠라고 우려했다. 이코노미스트들은 미국의 보호무역 조치가 미국의 성장률을 0.3~0.4%포인트 깎아내릴 수 있다는 경고도 내놓는다. 트럼프발 무역전쟁은 자칫 제 살 깎기뿐 아니라 세계 경제를 침체로 몰아가는 자충수가 될 수 있음을 직시해야 한다.
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