Trump threatens Harley-Davidson with tax punishment for move

Jun 27, 2018, 03:03
Trump threatens Harley-Davidson with tax punishment for move

The Trump administration imposed tariffs on imports of European steel and aluminum earlier this month, and in response, the European Union began charging import duties of 25 percent on a range of us products including big motorcycles like Harley's on June 22. "In 2017, almost 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the European Union countries is second only to the U.S.". Trump said in a series of tweets Tuesday morning.

The president said the move "will be the beginning of the end" for the company and threatened that "they will be taxed like never before!".

The new taxes are meant to answer tariffs the Trump administration is requiring on steel and aluminum imports from Europe.

The U.S. president, under increasing pressure from members of his Republican party to de-escalate the conflict, on Tuesday sought to assuage concerns about the iconic American motorcycle maker Harley-Davidson moving some of its production overseas due to retaliatory tariffs imposed by the European Union in response to U.S. duties on steel and aluminum.

"Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally", the company said.

Minutes later, Trump tweeted that the USA was "expanding" its "footprint" in the global trade market, warning countries to "play fair" or "pay tariffs".

In an SEC filing released on Monday, the company said that European Union tariffs on motorcycles exported from the United States jumped from 6 percent to 31 percent, forcing the move.

He alleged Harley-Davison's Monday announcement that it would move some more operations outside the USA was long planned and that it was using Europe's new tariffs as an excuse. Harley-Davidson had announced that it would be closing a plant in Kansas City, and laying off around 800 workers there.

Says Trump: "That was long before Tariffs were announced".

Harley executives later traveled to Washington for a meeting with Trump, who said they told him of the difficulty they faced selling motorcycles overseas. Harleys sold in America will continue to be made in America.

FBN's Jeff Flock discusses how Harley-Davidson is moving some of its production overseas.

The company has assembly plants in the United States, India and Brazil, and will open a new plant in Thailand in the summer. But most of its motorcycles sold in Europe are now manufactured in the US, he noted in a research report. Setting up production facilities overseas will take between nine and 18 months, the company said.

His company makes jet engine parts for aerospace companies and the military, so Trump's 25 percent tariff on foreign steel and 10 percent tax on foreign aluminum have resulted in huge price hikes for JBK's raw materials. According to Harley Davidson, Europe accounts for around 16 percent of all motorcycle sales.

Harley-Davidson bikes are lined up at a bike fair in Hamburg, Germany, February 24, 2017.

Harley-Davidson said it will not raise its prices to avert "an immediate and lasting detrimental impact" on sales in Europe. The story of William Harley and Arthur Davidson's brainchild turning into one of the most well-known motorcycle companies is a quintessential example of the American dream.

The only way left for Harley-Davidson to avoid the tariff burden was to shift some of its production to Europe. Even Harley Davidson is not exercised over the issue and it seeks to expand its footprint overseas.

Gov. Scott Walker echoed those comments, saying increasing markets for Wisconsin and American-made goods will reduce the trade imbalance and needs for tariffs. Since then, he's increased tariffs on the EU, Mexico, Canada and China, and promised additional fees in response to any retaliation.