CHICAGO -- From global manufacturers such as Harley-Davidson to small tech startups, companies are scrambling to rework supply chains built for an era of stable, open trade policy that is now under threat.
As President Donald Trump pushes to upend the status quo of global trade, companies that initially took a wait-and-see stance are starting to take action to shield their businesses from shifting trade policy.
On Monday, U.S. motorcycle maker Harley warned of higher costs because of retaliatory EU tariffs and said it would shift production of bikes destined for the European Union out of the U.S. to factories it has built in India, Brazil and Thailand. Harley CEO Matt Levatich said in April that the factory in Thailand was a "Plan B" the company employed after the U.S. abandoned the 11-country Trans-Pacific Partnership free-trade agreement.
The decision of the Milwaukee company -- which had been praised by Trump in 2017 as "a true American icon" -- came less than a week after Mercedes-Benz maker Daimler cut its 2018 profit forecast, citing growing trade tensions. Its German rival BMW said it was considering "possible strategic options" in view of the rising trade tensions between China and the U.S.
Harley is the latest example of how companies are finding themselves in the crosshairs following tit-for-tat retaliations over Trump's bid to rewrite global trade rules as part of his "America First" agenda.
Office furniture maker Steelcase Inc. last week reported a 230 basis-point fall in the gross margins of its American business in the first quarter due to higher raw materials costs following Trump's metal import tariffs.
Although it increased prices this month, the second increase in four months, Steelcase said it expected profit margins to remain under pressure for another quarter or two.
"A manufacturer can no longer assume that the direction of trade policy is towards freer and freer trade over time," Dustin Burke, a partner at Boston Consulting Group, told Reuters last month.
Analysts at Morgan Stanley estimate that the U.S. tariffs along with retaliatory duties imposed or under consideration by trade partners will affect 1 percent of global trade. But for some companies, that 1 percent covers a much larger share of their supply chain.