Not long ago, President Trump called trade wars “good and easy to win.” But historically, they have brought unintended consequences.
And U.S. companies are starting to see some of the less desirable consequences.
On Monday, Mid-Continent Nail, the largest nail manufacturer in the United States, laid off 60 workers at a Missouri factory in what the Washington Post said were the first casualties of the trade war that Trump is waging against trading partners.
That news followed Harley-Davidson’s announcement that it would move production of its Europe-bound vehicles offshore in response to a 31% tariff that the European Union imposed, which was itself retaliation against Trump’s tariffs on European steel. Harley didn’t say whether the move would lead to U.S. job losses, but many Harley workers are reportedly worried.
Harley’s stock fell as much as 7% during trading Monday.
Concerns about rising trade tensions also spread to the broader stock market. The Dow Jones Industrial Average declined 1.3% on Monday and the Nasdaq Composite index dropped 2.1% following reports that the Trump administration may bar Chinese companies from investing in U.S. companies with “industrially significant technology.” Shares of Chinese stocks traded on U.S. exchanges, such as Alibaba and JD, lost 4% or more of their value Monday.
Amid the early fallout of the mounting trade war, Trump took to Twitter, saying he was “surprised” about Harley Davidson’s move and assuring the company it would not “ultimately” pay E.U. tariffs, without clarifying how that would happen.
In 2017, Trump welcomed executives and workers from Harley-Davidson to the White House, thanking them for building their vehicles in the United States and assuring them, “I think you’re going to even expand.” House Speaker Paul Ryan also toured a Harley-Davidson facility last September, arguing that his proposed tax cut would keep its jobs from moving overseas.
Earlier on Monday, Treasury Secretary Steven Mnuchin addressed on Twitter the reported plans to bar Chinese investments in certain tech companies, calling them “false, fake news,” and saying they would not be specific to China. Instead, he said, they would apply “to all countries that are trying to steal our technology.”
In the name of protecting American jobs, Trump has imposed tariffs on steel and other products coming from China, Europe, and other countries. The 25% tariff on steel imports from Mexico and Canada were cited by Mid-Continent Nail as a reason for the layoffs. The company has been importing steel from Mexico that its workers turn into nails.
Mid-Continent warned that all of its 500 employees could lose their jobs by Labor Day.