The ongoing U.S. trade war against China has an important mission but consequentially harms American companies that make their products domestically, Polaris Industries CEO Scott Wine told CNBC on Monday.
“While we completely support the administration’s goal of having freer and fairer trade with China … we’re paying the most in tariffs, almost $110 million a year in tariff costs,” Wine said, resulting in price increases to consumers of 3%. Minnesota-based Polaris makes snowmobiles and ATVs as well as motorcycles under the Indian brand.
“Most of our competitors don’t pay any [tariffs] because they don’t manufacture or invest in the United States,” he added, pointing to Polaris’ roughly 9,000 employees in the U.S., where it does the bulk of its manufacturing. “Our competitors are investing more in Mexico and avoiding the tariffs.” The company has a total of 12,000 workers worldwide.
In a “Squawk Box” interview, Wine said that high-end consumers have been able to absorb the prices increases — but at the lower end, Polaris saw market share losses.
President Donald Trump, who on May 10 increased tariff rates on $200 billion worth of Chinese goods to 25% from 10%, has threatened duties on an additional $325 billion of goods, effectively covering all Chinese imports.
However, Trump and Chinese President Xi Jinping called another tariff cease-fire last month and agreed to restart trade talks. Officials from both sides are set to meet in-person Tuesday and Wednesday in Shanghai.
In the meantime, Wine said that Polaris is working with the Trump administration to try to get “relief” from the tariffs. “They don’t want to penalize companies for investing and manufacturing in America,” he said. “I know they want us to continue to invest in our American workforce.”
On May 7, three days before the U.S. tariff hike to 25%, Wine said on CNBC that such a move would be “downright catastrophic in terms of impact on the company and employees.”
Under that new reality, Wine said Monday that Polaris has been using “mitigation efforts” to mute price hikes, whether it’s through changing the country where products are made or pushing back on its Chinese suppliers.
However, he warned the company may be forced to move the bulk of production to its facility in Monterrey, Mexico. “We’re going to keep fighting the battle until it happens.”
Over the past 12 months, shares of Polaris are off about 10%. Though year to date, the stock is up around 21%, basically matching the 2019 gains for the S&P 500.
