MILWAUKEE (CBS 58) -- As the trade war between the U.S. and Canada intensifies, one of Wisconsin's most iconic companies is about to get caught in the middle.

On Tuesday, Sept. 8, Canada will institute a 50% tariff on U.S.-origin motorcycles. The retaliatory tariff applies to large, gas-powered bikes, a signal Canadian government is specifically targeting the iconic American brands of Indian and Harley-Davidson, which is headquartered in Milwaukee.

Last week, Canada's Industry Minister, Mélanie Joly, indicated the tariffs are designed to specifically have an impact in key battleground states ahead of the U.S. midterm elections in November.

"We are putting pressure, clearly, on different states and different people," Joly told the CBC in an August 25 interview. "We don't want to do that. We don't want this trade war. We did not start it."

Canada accounted for nearly 5% of Harley-Davidson's worldwide sales last year with 6,434 motorcycles sold there in 2025. A company spokesperson said Harley-Davidson did not have any comment on the new Canadian tariff.

Congressman Tom Tiffany, the Republican candidate for governor, cited Harley-Davidson when asked about tariffs at a campaign event in Mosinee Monday.

"Remember, Harley-Davidson announced they're bringing jobs back to America," Tiffany said. "They're bringing them from Europe back to America."

Tiffany appeared to be referring to a June announcement from Harley-Davidson, stating it would be returning some of its production back to plants in Pennsylvania and Wisconsin. He went on to defend the Trump administration's aggressive trade strategy with Canada.

"Canada has a 300-percent tariff on butter. Our dairy products are tariffed significantly," Tiffany said. "It's time somebody stood up to these countries that have abused free trade, and we make sure we have fair trade."

Tiffany's campaign did not respond to questions Friday about the Canadian tariff on motorcycles.

Tiffany's Democratic opponent in November, Milwaukee County Executive David Crowley, indicated he wants tariffs to be a top issue in the governor's race.

Crowley told CBS 58 in an interview Friday he hadn't spoken with Harley-Davidson officials about the tariffs but added he's met with other manufacturers and farmers who were feeling a pinch from the U.S.-Canada trade war.

"It is very clear that Tom Tiffany and Donald Trump, they support these tariffs that are going to actually hurt many of these made-in-Wisconsin businesses," Crowley said. "That means we have to make sure we're stepping up in whatever ways possible, listening to the businesses here to make sure we're protecting them."

In a trade war, who pays?

Rebecca Neumann, an economics professor at UW-Milwaukee, said the Canadian tariffs could end up hurting Harley-Davidson if higher prices deter enough riders in Canada from buying a new motorcycle.

"A Harley is, in some cases, a luxury good," Neumann said. "You need some sort of form of transportation, but you're buying a Harley because you want to ride a big motorcycle, right? Canadian consumers might decide, 'Yeah, this price is not what I'm going to pay.'"

Neumann said a trade war can affect multiple parts of the supply chain. A manufacture might cut costs elsewhere in order to absorb new tariff costs without having to increase the price of its products.

However, Neumann added history has shown tariff increases are far more likely to end up leading to higher prices.

"Ultimately, a lot of the data has shown that import tariffs end up being passed completely through to consumers," Neumann said. "Consumers end up with the majority of the price increase."

Neumann said this particular trade war between the U.S. and Canada is nakedly political, so she was not surprised to see Joly's remarks about Canada crafting tariffs with the idea of influencing American voters.

She noted President Donald Trump rewrote trade agreements with Canada and Mexico during his first presidency. While Canada made some adjustments under President Joe Biden, the U.S. even in 2023 had filed another complaint over Canadian trade practices, according to a UW-Madison review.

Still, Neumann said the Trump administration's new preference for annual reviews of trade agreements would create far too much instability.

"This is where it's become tit-for-tat that doesn't benefit anyone," Neumann said. "They just decided recently they're not gonna renew that on a long-term basis; they wanna do it every year. That adds more to the uncertainty."