In February, 2017, just a couple of weeks after Donald Trump’s Inauguration, a group of executives and employees from Harley-Davidson rode their motorcycles to the South Lawn of the White House, took off their helmets, and greeted the new President. “Harley-Davidson, made in America,” Trump said, eying the gleaming hogs admiringly, before lapsing into his trademark solipsism. “The bikers for Trump were, like, unbelievable. They were with me all the way, right? And they love your bikes. . . . We had thousands of them.”

At the time, Harley-Davidson, which has factories in Missouri, Pennsylvania, and its home state of Wisconsin, seemed eager to embrace Trump and his “Make America Great Again” agenda of economic nationalism. But on Monday it announced in a filing with the Securities and Exchange Commission that, because of Trump’s trade war with Europe and other parts of the world, it may well have to shift production from the United States to factories in other countries where it has plants, such as Brazil, India, and Thailand.

As it explained in its filing, the company doesn’t have much choice. Europe is its second-largest market: last year, it sold almost forty thousand bikes there. Last week, the European Union responded to the Trump Administration’s imposition of hefty import duties on European steel and aluminum products by slapping tariffs of twenty-five per cent on a range of U.S.-made products, including Harley-Davidson motorcycles.

In the filing, the company said that it “expects these tariffs will result in an incremental cost of approximately $2,200 per average motorcycle exported from the U.S. to the EU.” Rather than passing this cost increase to its dealers and customers, which could well hurt sales, the company said that it would initially bear the burden itself, which it estimated to be “approximately $90 to $100 million” on an annualized basis. “To address the substantial long-term cost of this tariff burden, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the U.S. to its international facilities to avoid the tariff burden. Harley-Davidson expects ramping-up production in international plants will require incremental investment and could take at least 9 to 18 months to be fully complete,” the announcement said.

Trump, of course, reacted furiously. “Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag,” he said in a tweet. “I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion.” On Tuesday morning, Trump returned to the attack, tweeting, “Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end—they surrendered, they quit!”

But the President’s bluster couldn’t disguise the fact that his trade war, which some Wall Street analysts initially wrote off as a quixotic diversion, is getting serious—and that it is already hurting many American companies. The makers of Levi’s, Jack Daniel’s whiskey, and Tropicana orange juice are among the other businesses whose products have been hit by sizeable E.U. tariffs.

Next week, American farmers could join the list of victims. These days, China is a major market for American food producers, and, on July 6th, the Trump Administration is set to levy tariffs on a range of Chinese manufacturers. The government in Beijing has said that it will retaliate by imposing duties of fifteen per cent on a wide range of American food products, including soybeans, cashews, almonds, apricots, strawberries, and other fruits. Pork products, which are very popular in China, would be hit with a tariff of twenty-five per cent.

Just as Trump is personally driving the U.S. protectionist agenda, Xi Jinping, the Chinese President, is directing the Chinese response—and he seems to be in no mood to back down. “In the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek. In our culture we punch back,” he told a group of Western C.E.O.s last week, according to a report in the Wall Street Journal.

As these tit-for-tat measures go into effect, and the prospect of a negotiated settlement diminishes, investors are starting to get spooked. On Monday, the Dow fell by almost five hundred points, before recovering slightly, closing down three hundred and twenty-eight points, or about 1.3 per cent, at 24,253. The selloff was worldwide, with stocks also falling sharply in Europe and Asia.

Analysts are divided about what impact the protectionist measures will have on the broader economy. If you add up all the products and industries that are caught up in Trump’s hostilities, it is still pretty small relative to the gross domestic product—the broadest measure of over-all production—which is about to pass twenty trillion dollars. For this reason, many economists have argued that the trade war doesn’t have major macroeconomic implications.

But as Trump continues to issue threats, and other countries prepare to respond, some analysts are warning that things could spiral out of control. “The good news is that we are still many steps away from a full blown global trade war,” Michelle Meyer, an economist at Bank of America Merrill Lynch, wrote in a note to the bank’s clients, at the end of last week. “The bad news is that the tail risks are rising and our work and the literature suggest a major global trade confrontation would likely push the US and the rest of the world to the brink of a recession.”

A few days ago, Trump threatened to impose tariffs of twenty per cent on European-built cars. On Sunday night, the Journal reported that this week the Treasury Department would block any firms with at least twenty-five-per-cent Chinese ownership from buying U.S. companies involved in what the White House calls “industrially significant technology.” Taken together with a proposal to block some key technology exports to China, this appeared to represent another significant escalation.

On Monday afternoon, the White House dispatched Peter Navarro, Trump’s hawkish trade adviser, to calm the markets. “All we’re doing here with the President’s trade policy is trying to defend our technology when it may be threatened,” Navarro said on CNBC. He added that the President is “going to get good information this week on where the chess board stands and make decisions accordingly.”

That was hardly reassuring. Navarro said pretty much the same thing when Trump imposed the steel and aluminum tariffs on the European Union, which, thanks to European retaliation, are now hurting the very people whom Trump welcomed to the White House sixteen months ago. “Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe,” Harley-Davidson said, in explaining its decision.

Back in March, Trump claimed that trade wars are “good and easy to win.” The American employees of Harley-Davidson have already discovered that isn’t true. How long will it take the President to learn?