Donald Trump Threatens Harley-Davidson with Taxes Like Never Before

Harley Davidson to shift production overseas to avoid EU tariffs	 	 	 			Sean Gallup  Getty Images

Harley Davidson to shift production overseas to avoid EU tariffs Sean Gallup Getty Images

American motorcycle company Harley-Davidson announced it would move some of its production outside of the USA in response to the trade spat between the European Union and President Donald Trump. Mr. Trump said. "Harley must know that they won't be able to sell back into USA without paying a big tax!". Harley-Davidson has denied a link between Kansas City and Thailand.

On Monday, it said it plans to shift some manufacturing overseas to avoid European tariffs imposed last week.

"People might think this is a smart economic move, but how many manufacturing plants are going to be moving over?" USA motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession.

Fellow Republican Gov. Scott Walker is echoing those comments. Its German rival BMW said it was considering "possible strategic options" in view of the rising trade tensions between China and the United States. Harley Davidson Motorcycles said it will take a hit of $30 million to $45 million for the rest of 2018, but won't raise prices for customers.

Earlier today, Trump warned such a move would be the beginning of the end for Harley Davidson.

In an October re-election campaign launch video touting his record, Walker rides his Harley and asks the viewer, "Are you with me?"

The company reiterated on Tuesday that it was moving some production of motorcycles destined for sale in the European Union to its existing global facilities to "address the additional tariffs imposed by the EU".

It makes sense for Harley to reposition its long-term strategy outside the United States: Last quarter, Harley's sales in the United States fell 12%, but they grew 6.8% in Europe, the Middle East, and Africa.

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Pence even said that some of the equipment from Kansas City was being packed up and shipped to the new Thailand plant.

Harley announced Monday that because of the European Union's new tariffs on U.S. motorcycles - which came in retaliation for Trump's steel and aluminium tariffs - the company was shifting some production to non-US plants.

In January, the company said it was closing a factory in Kansas City, Missouri, and consolidating it into a York assembly plant.

In the escalating trade war with the U.S., Brussels has a clear message for Donald Trump: It's not backing down. Harley executives previously said price increases from the steel and aluminum tariffs could add up to $20 million in raw material costs this year.

THE FACTS: Pflughoeft said Harleys sold in the USA will continue to be made in the U.S. "No, it's not surprising at all", said Scott Lincicome, an worldwide trade attorney and an adjunct scholar at the Cato Institute who has been critical of Trump's approach. Europe represents the largest market for Harley-Davidson motorcycles outside the United States, and the relocation of manufacturing is seen as a better long-term solution to sustaining the company's business ventures in the area.

But the tariffs probably hastened Harley's exit. "On a full-year basis, the company estimates the aggregate annual impact due to the European Union tariffs to be approximately $90 to $100 million".

In another tweet, Trump said the company could face a "big tax". I can't say for sure, but I imagine he has moved over a lot of businesses to avoid tariffs and taxes, he said.

The company said that retaliatory European taxes on imported motorcycles will have a "significant impact" on its business, increasing the cost of motorcycles by $2,200 on average, so has made a decision to move production elsewhere.

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