Trump says no Harley should be built in another country, move abroad would be ‘beginning of the end’
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Trump says no Harley should be built in another country, move abroad would be ‘beginning of the end’

US-based Harley Davidson said on Monday it may locate some production outside the US in response to European retaliation for the president’s tariffs on imported metals.

business Updated: Jun 26, 2018 18:42 IST
Harley Davidson,Donald Trump,Harley Davidson production
Harley Davidson motorcycles are displayed for sale at a showroom in London, Britain.(Reuters File Photo)

US President Donald Trump accused Harley-Davidson Inc. of using new tariffs on trade as cover for an existing plan to shift some production abroad and threatened the motorcycle manufacturer with a “big tax” on bikes imported to the US if it relocates some plants overseas.

He also said “A Harley-Davidson should never be built in another country-never! 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!”

The company said in a government filing Monday that it may locate some production outside the US in response to European retaliation for the president’s tariffs on imported metals.

But Trump took issue with that on Tuesday.

“Early this year Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand. That was long before Tariffs were announced. Hence, they were just using Tariffs/Trade War as an excuse. Shows how unbalanced & unfair trade is, but we will fix it,” Trump said Tuesday in a Twitter posting.

The president followed up by warning the company that goods produced overseas and imported back into the US could be taxed. “Harley must know that they won’t be able to sell back into US without paying a big tax!” Trump said on Twitter Tuesday.

Chief executive officer Matt Levatich said in April that the factory in Thailand was a “Plan B” that Harley employed after the US abandoned the 11-country Trans-Pacific Partnership free-trade agreement Trump withdrew from last year. He’d said they didn’t relish the investment, which he also said was needed to maintain access to a key market.

The early-morning missive from the president marked the second consecutive day Trump took aim at the iconic motorcycle maker, after the company said in an SEC filing on Monday that tariffs enacted by the European Union in response to Trump’s penalties on imported steel and aluminium would add as much as $100 million a year to its costs.

“To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the US to its international facilities to avoid the tariff burden,” the company said.

On Monday, Trump said he was surprised the motorcycle manufacturer “would be the first to wave the White Flag.”

“I fought hard for them and ultimately they will not pay tariffs selling into the EU, which has hurt us badly on trade, down $151 Billion,” Trump continued. “Taxes just a Harley excuse - be patient!”

In a subsequent tweet, Trump said the US is managing to get other countries to lower existing tariffs and barriers that he said have been in place for years trough bad deals. “We are opening up closed markets and expanding our footprint. They must play fair or they will pay tariffs!” he said in the post.

White House press secretary Sarah Huckabee Sanders downplayed the announcement earlier Monday, saying Trump’s “trade and economic policies have been a huge benefit to the American economy.”

“The European Union is attempting to punish US workers with unfair and discriminatory trade policies, and President Trump will continue to push for free, fair and reciprocal trade in hopes that the EU will join us in that,” Sanders told reporters at the White House.

Jack Daniel’s feels pinch

Tariffs have also forced the hand of the maker of another iconic American brand, Jack Daniel’s.

Brown-Forman Corp., which also produces Woodford Reserve and other bourbons, will have to raise prices for its whiskey sold in the European Union following the implementation of a 25% tariff, according to spokesman Phil Lynch. The higher prices, which he said would primarily affect Jack Daniel’s, would amount to about a 10 percent increase for consumers.

Lynch did not say what effect the expected price increases would have on European sales, noting that “we continue to invest behind the growth of American whiskey in the EU.”

Brown-Forman fell to its lowest level in almost seven months on Monday.

Harley shares fell 6%, the biggest drop in almost five months, to close at $41.57. The stock is down 18% this year.

The EU’s levies are only the latest blowback Harley has faced from Trump’s trade policies. A year after Trump pulled the US out of a 12-nation trade deal, the Trans-Pacific Partnership, in January 2017, Harley announced it would close its factory in Kansas City, Missouri, and consolidate production in York, Pennsylvania, eliminating about 260 jobs.

Trump hosted Levatich and other Harley executives and union leaders for a White House listening session in February 2017 and hailed the motorcycle manufacturer as “a true American icon” and “one of the greats.”

Ryan weighs in

“Thank you, Harley-Davidson, for building things in America,” Trump said at the time. “I think you’re going to even expand. I know your business is now doing very well and there’s a lot of spirit right now in the country that you weren’t having so much in the last number of months that you have right now.”

Harley-Davidson’s headquarters are in Milwaukee, and on Monday the office of House Speaker Paul Ryan, a Wisconsin Republican who has opposed Trump’s move to impose tariffs, said the company’s announcement was evidence of the detrimental effect of the president’s trade policy.

“This is further proof of the harm from unilateral tariffs,” AshLee Strong, a Ryan spokeswoman, said Monday. “The best way to help American workers, consumers, and manufacturers is to open new markets for them, not to raise barriers to our own market.”

First Published: Jun 26, 2018 18:41 IST