Earlier this week, Harley-Davidson (NYSE: HOG) suffered one of the most significant stock falls in its history. The company, which has struggled for market share in recent years, made an SEC filing on Monday, attributing plummeting stock prices to President Trump’s trade policies and the decision by the European Union to raise tariffs on American auto imports.

In a tweet on Wednesday, the President said that “Harley-Davidson should stay 100% in America, with the people that got you your success. I’ve done so much for you, and then this. Other companies are coming back where they belong! We won’t forget, and neither will your customers or your now very HAPPY competitors!”

The President is implying that the trade situation would have eventually worked out well for Harley-Davidson. This may be hard to understand for anybody who is looking at the figures…

• Harley-Davidson will now be subject to 31% tariffs on motorcycles it exports to the European Union.
• Initial costs would be shouldered by the company rather than consumers, costing Harley-Davidson $45 million in the rest of 2018, and $90 – $100 million in 2019.
• Harley-Davidson motorcycles in Europe would cost $2,200 more at retail with tariffs applied.

In their SEC filing, the company said that “Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region [Europe]. Therefore, Harley-Davidson will not raise its manufacturer’s suggested retail prices or wholesale prices to its dealers to cover the costs of the retaliatory tariffs.”

Harley Davidson, Is It All About Tariffs?

There are some analysts who believe there is more going on than just tariffs. Europe was the biggest growth market for them in 2017 and was responsible for 20% of its revenue. Although speculative, it is not inconceivable that Harley-Davidson would move towards more overseas capacity to serve the European market, with or without retaliatory tariffs. To some analysts and commentators, the tariffs simply gave them the push it needed and an excuse to increase offshore production.

While the brand slid almost 5% on Monday’s stock market, it started to gain back the losses, even in the face of the President’s damning tweet. As of Thursday morning, stock was up 0.80%, trading at $41.65.

Politics and finance have been closer than ever before in recent months, with President Trump taking a direct interest in American businesses. The development of the ongoing international trade disputes will undoubtedly reveal the vulnerabilities and strengths of some of America’s most prominent companies.