In an early morning tweet storm, President Donald Trump threatened to tax Harley-Davidson "like never before" if it followed through on its announcement that it would move some production outside the U.S. to avoid new European Union tariffs on the importation of motorcycles from the U.S.
The European Union and a small handful of other allies were initially exempted from the steep, global tariffs that the Trump administration slapped on all aluminum and steel imports. Then, on May 31, the White House announced that the exemptions were ending.
The EU retaliated to the new tariffs with tariffs of its own on $3.2 billion in American imports. As part of this tariff rollout, the EU tariff on American motorcycles was raised from 6 percent to 31 percent. Harley-Davidson estimated that these EU tariffs would cost the company between $30 million and $45 million for the rest of 2018, and between $90 million and $100 million for every year after that.
In addition, Harley-Davidson estimated that the tariffs on steel and aluminum would cost it an additional $15 million to $20 million.
On Monday, Harley-Davidson announced that it would be moving some of its production outside the United States. In an official statement, the company said:
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. Europe is a critical market for Harley-Davidson.
Trump tweeted Tuesday, “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 Aura will be gone and they will be taxed like never before!”
Trump also tweeted in defense of his tariffs, saying that the EU had “long taken advantage of the U.S.” when it came to trade. “In the end it will all even out—and it won't take very long!”
In another tweet, Trump accused Harley-Davidson of opportunism, saying that it had moved some jobs to Thailand before the tariffs took effect.
Trump was referring to the closure of Harley-Davidson's facility in Kansas City, Missouri, which was announced in January. While Harley-Davidson said that roughly half the jobs would be moved to Pennsylvania and that the opening of a plant in Thailand was unrelated, the union representing the employees claimed that some of the jobs were being moved to the facility in Thailand.
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.....
— Donald J. Trump (@realDonaldTrump) June 26, 2018
....We are getting other countries to reduce and eliminate tariffs and trade barriers that have been unfairly used for years against our farmers, workers and companies. We are opening up closed markets and expanding our footprint. They must play fair or they will pay tariffs!
— Donald J. Trump (@realDonaldTrump) June 26, 2018
....When I had Harley-Davidson officials over to the White House, I chided them about tariffs in other countries, like India, being too high. Companies are now coming back to America. Harley must know that they won’t be able to sell back into U.S. without paying a big tax!
— Donald J. Trump (@realDonaldTrump) June 26, 2018
....We are finishing our study of Tariffs on cars from the E.U. in that they have long taken advantage of the U.S. in the form of Trade Barriers and Tariffs. In the end it will all even out - and it won’t take very long!
— Donald J. Trump (@realDonaldTrump) June 26, 2018
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 Aura will be gone and they will be taxed like never before!
— Donald J. Trump (@realDonaldTrump) June 26, 2018
This latest announcement by Harley-Davidson related only to the production of motorcycles that would be sold to the European Union. Motorcycles sold in the United States would still be made domestically. Because of this, it is unclear what Trump was referring to when he mentioned Harley-Davidson not being “able to sell back into U.S. without paying a big tax.”
The U.S. is the largest market for Harley-Davidson. The EU is the second largest, worth about 16 percent of all sales in 2017.
Harley-Davidson plans to release more information on what exactly the new production plan would look like on July 24.
