Subscribe to Breaking News emails

You have successfully subscribed to the Breaking News email.

Subscribe today to be the first to to know about breaking news and special reports.

Trump's trade war is meant to protect American jobs — so why are businesses planning layoffs?

"We're in a whole new world," one trade expert said.
by Ben Popken /  / Updated 
Image: An employee moves a flywheel assembly at the Harley-Davidson Inc. facility
An employee moves a flywheel assembly at the Harley-Davidson Inc. facility in Menomonee Falls, Wisconsin on Sept. 18, 2017.Daniel Acker / Bloomberg via Getty Images file

Breaking News Emails

Get breaking news alerts and special reports. The news and stories that matter, delivered weekday mornings.

President Donald Trump's escalating trade war is supposed to be about protecting American jobs — but the uncertainty it's creating is forcing some businesses to shift production overseas and cut back on hiring.

On Monday, Milwaukee-based motorcycle manufacturer Harley-Davidson announced it would be moving the production of vehicles bound for Europe to international facilities to avoid what it estimated would be $100 million in annual tariffs.

The move — which triggered a market selloff, sending the Dow Jones down almost 500 points — was in reaction to the E.U.'s raising tariffs on U.S.-produced motorcycles from 6 percent to 31 percent. The tariffs were in retaliation for Trump's levying tariffs on imported aluminum and steel.

"Harley-Davidson maintains a strong commitment to U.S.-based manufacturing, which is valued by riders globally," the company said in a statement. "Increasing international production to alleviate the E.U. tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the E.U. and maintain a viable business in Europe."

Unlike previous tariff arrangements, this one has had little in the way of planning. That's knocked businesses on their heels and left them wondering whether the president's tariffs are legitimate policy or merely political bluster.

"We're in a whole new world," P. Welles Orr, an international trade adviser who worked as a trade representative under George H.W. Bush, told NBC News. "Companies left and right are getting caught off guard."

“It's hard to run a business when the rules keep changing," Craig Kennison, an auto industry analyst with Robert W. Baird & Co, told The Milwaukee Journal Sentinel this week.

Harley isn't the only company having to reassess its corporate model on the fly.

CEOs surveyed by the influential Business Roundtable lobby said this month they've reduced their hiring plans for the year by 13 percent and trimmed their spending expectations by 4 percent.

Trump escalated the trade war tensions Sunday, threatening in a tweet to hit back harder at any country that has placed tariffs on American goods, demanding they "remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A."

"This administration is about shock and awe — and in trade policy that is clearly by design," Orr said. "To this administration that chaos is a good thing. It's got people up in arms and that's its purpose."

For now, Trump's trade war is injecting uncertainty and confusion into the lives and job prospects of the very workers who may have elected him.

Correction: In a previous version, the quote "Companies left and right are getting caught off guard," was attributed to Craig Kennison when it should have been to the preceding source, P. Welles Orr.

Breaking News Emails

Get breaking news alerts and special reports. The news and stories that matter, delivered weekday mornings.
MORE FROM news