Harley-Davidson becomes unlikely flashpoint in Canada-U.S. trade war

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“If you have production in a country where there’s very little U.S. value added, and then that production moves to the U.S., that will overall be a net gain for manufacturing in the U.S. for that specific product category,” said Jason Miller, a supply chain management professor at Michigan State University.

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“But it may not be a net gain for overall jobs in the U.S. if that means less demand for that broader product, and therefore less employment in the distribution side,” he added.

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“A lot of the manufacturing jobs that were lost were not necessarily because of offshoring to other countries, but because of technological changes,” Obregon said, noting that the advent of advanced robotics could mean that reshoring production means fewer jobs.

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A 50 per cent tariff would likely reduce Harley-Davidson exports to Canada, Miller said. Exporters may lower their prices slightly, but not enough to offset the duty, meaning the total landed cost would still rise substantially, and import volumes would likely fall.

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But Gary Hufbauer, senior fellow at the Peterson Institute for International Economics, said iconic brands such as Harley-Davidson are easy symbolic targets for foreign retaliation because they can absorb more of the tariff through their profit margins without immediately becoming unprofitable.

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“Prices charged for iconic brands tend to have a large component of ‘economic rent,’” he said. “For this reason, the sellers can absorb a good part of the tariff and still make a decent profit.”

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This means Canada can impose a high penalty for all to see, while Harley absorbs some of the tariff through its margins rather than passing along the full cost to buyers.

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Miller does not expect the tariff’s effects to influence major business decisions — including production changes or layoffs — until early next year. The first effects are more likely to be commercial: companies accepting lower margins, reducing hours or postponing investments, even as the impact shows up quickly in balance sheets and export data.

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The question is whether those effects will matter before the midterms.

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In York, Pennsylvania, where Harley has its largest U.S. manufacturing plant, the House race is considered a toss-up between incumbent pro-tariff Republican Scott Perry and Democratic challenger Janelle Stelson.

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“This is one of Democrats’ best pickup opportunities compared to other districts that are similar at the partisan level,” said Erin Covey, head of The Cook Political Report’s coverage of the U.S. House of Representatives.

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“Perry is, by far, one of the most vulnerable Republicans in the country,” she added, noting that he “has been in lockstep with [the president]” on tariff policy.

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Wisconsin presents a different political test. Harley-Davidson is headquartered in Milwaukee, but the company’s home district, the 6th Congressional District, is considered solidly Republican. Incumbent Glenn Grothman is also aided by a divided opposition, with independent candidate Mike Thurow and Democrat Brad Smith competing for votes that might otherwise consolidate behind a single challenger on the left.

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But Harley-Davidson may still be useful to both parties as a symbol of the competing arguments over Trump’s trade policy.

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“If people who are in the workforce make this link between tariffs and affordability … it could potentially impact their vote,” Obregon said.

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And Harley-Davidson is a big brand capable of grabbing voters’ attention.

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“Harley-Davidson is such an iconic American brand. It’s something that voters can maybe connect to more easily than if this were happening with a different company,” said Covey.