Motorcycles targeted in tariff tiff

Yesterday, the Department of Finance Canada released a long list of goods that would be immediately subject to a 25% tariff when entering Canada from the United States. The items range from beef to poultry, from tomatoes to wine, from underwear to waterproof boots, from tires to guns, from water heaters to... motorcycles. The list includes all the various classes of motorcycles based on engine size, as well as electric motorcycles.

That broad sweep means that, unlike in the past, it's not just Harley-Davidson that is affected, but also exports to Canada by Indian and Zero.

While the numbers of motorcycles sold in Canada and Mexico by the U.S. manufacturers is not a large percentage of overall sales, the tariffs have other effects because of the amount of commerce across the borders. Imagine a scenario in which raw materials from the United States are shipped to Mexico to make parts that are then shipped back to the United States where Harley-Davidson uses those parts to assemble a motorcycle in York, Pennsylvania. Even if the finished product remains in the United States, all the tariffs associated with those multiple border crossings add to the price.   

Nobody knows how this trade war will play out, however. Also yesterday, Commerce Secretary Howard Lutnick, in an interview on Fox Business, said he believed there was a chance Trump could reach some compromise on the Canada and Mexico tariffs, perhaps as soon as today. On the other hand, in his address to Congress yesterday evening, Trump didn't offer any hints that he was willing to back down.