Published: Thu, June 28, 2018
Markets | By Erika Turner

Harley-Davidson move shows Trump trade war, tariffs worst fears

Harley-Davidson move shows Trump trade war, tariffs worst fears

He also vowed to retaliate against Harley-Davidson with taxes and said its "employees and customers are already very angry at them".

Harley-Davidson has disputed those allegations, arguing the move was about boosting overseas sales.

Trump also warned Harley that the company would be heavily taxed if it tried to import goods from its European production centers back to the USA, though there is no indication that the vehicles it produces there would be sold anywhere but on the continent. Mr. Trump tweeted, "Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand".

Iconic motorcycle maker accused by Trump of "waving the white flag" after it announced plans to move some of its production out of the US.

"For Harley to be forced to move production out of the country because of the tariffs is very damaging to Trump's repeated claim that his trade, tax and regulatory policies will get companies to boost their USA investments and create good manufacturing jobs", Edward Alden, senior fellow at the Council on Foreign Relations, told Business Insider. The E.U. tariffs appear to be a direct response to the tariffs imposed by the Trump administration on European steel and aluminum.

Milwaukee-based Harley said Monday that European Union tariffs on its American-made motorcycles jumped between 6 percent and 31 percent as a result of the escalating trade war, adding about $2,200 in cost to the average Harley sold in the EU.

The Milwaukee-based company announced Monday that it is moving production of motorcycles sold in Europe from US factories to facilities overseas.

Each motorcycle will cost an average of $2,200 extra per motorcycle after the tariff was raised last week on imported US bikes from 6 percent to 31 percent, according to the filing.

"Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers' businesses", a Harley-Davidson regulatory filing said.

Trump vowed to make the iconic motorcycle maker great again when he took office previous year.

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Dropping sales is the reason the company said it is consolidating its Kansas City plant into the York facility, where 450 jobs will be added. Its German rival BMW said it was considering "possible strategic options" in view of the rising trade tensions between China and the United States. Moreover, the European Union is highly unlikely to pursue Harley Davidson specifically.

Harley-Davidson shares closed down 0.6 percent at $41.32, after falling almost 6 percent on Monday.

The escalating trade war spearheaded by President Donald Trump is reminiscent of the 1800s, according to a senior figure at Swiss bank UBS.

Harley-Davidson said it expected the ramp-up in production to take nine to 18 months.

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.

But Trump's rage at Harley-Davidson and his displeasure with a company's announcement that it would do what it thinks is best to maximize profits amid a shifting trade landscape shows the political danger of picking economic winners and losers. That was long before Tariffs were announced. He hasn't spelled out what he would do to further that policy and his spokeswoman repeated that same position Tuesday when asked to react to Trump's tweets. But the firm said Monday that it was shifting more production overseas specifically to blunt the impact of the tariffs imposed by Europe.

Here are the facts about Harley-Davidson and trade.

Harley Davidson hasn't responded to a request for comment by Observer.

In 2017, almost 40,000 riders bought a Harley-Davidson motorcycle in Europe, accounting for more than 16% of the company's sales a year ago.

In Trump's view, his relationship with Harley-Davidson - company executives visited the White House in February 2017 - ensured the company would play ball with the administration's economic agenda. But Trump wasn't quite done with his remarks about Harley-Davidson this morning.

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