Trump says Harley-Davidson is using trade tensions as excuse to move

World
Europe

01:38

US President Donald Trump accused motorcycle maker Harley-Davidson Inc on Tuesday of using trade tensions over tariffs as an excuse to move production for European customers overseas.

“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,” Trump said on Twitter.

“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 US without paying a big tax!”

The US motorcycle maker Harley-Davidson said in a stock market filing on Monday that it will move some production overseas for European customers to avoid retaliatory tariffs that could cost it up to 100 million US dollars per year.

The EU's top trade official on Tuesday said the decision of Harley-Davidson to shift some manufacturing of its iconic motorcycles overseas, which President Donald Trump criticised, was a natural consequence of a protectionist US trade policy.

"We don't want to punish, but that is the unfortunate consequence, that (US companies) will put pressure on the American administration to say hey, hold on a minute, this is not good for the American economy," EU Trade Commissioner Cecilia Malmstrom told a news briefing.

As a countermeasure against the US steel and aluminum tariffs imposed earlier this month, the EU last Friday increased tariffs on imported motorcycles from the US to 31 percent, up 25 percentage points.

The increased tariffs will result in an incremental cost of about 2,200 US dollars per average motorcycle. Harley-Davidson said it will not adopt price increases in the EU market but will shift some US production instead.

VCG Photo‍

“Increasing international production to alleviate the EU tariff burden isn’t 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 said in the filing.

"We think Harley's decision to protect EU demand is wise for the long-term health of the market," said Baird Equity Research, noting "But we expect the near-term impact to weigh on estimates and sentiment until a clearer path to mitigation is outlined."

Harley sold about 40,000 new motorcycles to the EU market last year, which accounted for over 16 percent of its total sales. The revenues generated from the EU market ranked second only after the US market.

The company will complete its production shift to its overseas plants such as Australia, Brazil, India and Thailand in 18 months. More details on tariff-related plans will come on July 24, when it reports its second-quarter earnings.

A blow to Trump

US President Donald Trump on Monday said he was surprised by the company’s plans. He slammed it and described the plan as waving the “White Flag”. The plan is a blow to the Trump administration that wants the company to make more motorcycles in the US.

Harley-Davidson is based in Wisconsin, a key state for Trump’s narrow win in 2016 election. The president specially met the company’s senior executives at the White House after he took office last year to push his “America First” trade policies.

However, as a dominant player in the motorcycle market, it has been counting the costs of Trump’s trade policies. Harley shares closed down nearly six percent on Monday, and have lost about nine percent since the trade disputes between the US and the EU started in early March.