Trump threatens Harley-Davidson with ‘big tax’ as firm plans move

Trump threatens Harley-Davidson with ‘big tax’ as firm plans move

Trump threatens Harley-Davidson with ‘big tax’ as firm plans move

After the European Union hit motorcycle imports from the US with a 31 percent tariff, Harley-Davidson decided that its best move was to move production outside of the U.S.to avoid the tariff altogether. In 2017, almost 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the European Union countries is second only to the U.S.

Economist Stephen Moore found himself at a loss for words on Tuesday morning when he called the decision by Harley-Davidson to move some manufacturing to Europe one of the "worst corporate decisions ever", only to have no answer when asked if they should lose millions of dollars to appease Donald Trump. Tuesday he threatened Harley-Davidson, saying shifting production would be "the beginning of the end".

So on Monday, despite the US President batting for it, the company announced it is shifting some of its production facilities overseas to avoid stiff retaliatory tariffs imposed by the European Union in response to the White House's trade measures, leaving the President holding the hot potato in a trade war he promised would deliver easy wins.

The EU tariffs went into effect Friday, increasing the cost of a US-made motorcycle by $2,200.

It was unclear what taxes Trump was referring to, and why the company might have to pay them, since it will maintain production in the United States for US customers. The EU's trade chief said last week that it was "left with no other choice" after Mr. Trump imposed tariffs of 25 percent on steel imports and 10 percent on imported aluminum from the EU on June 1.

Those tariffs were imposed after the Trump administration imposed tariffs on steel and aluminum exports from Europe.

Harley-Davidson announced it will move some production of European motorcycles to the EU to avoid tariffs.

Harley announced in January that it was closing its 20-year-old final assembly plant in Kansas City, Missouri, which employed around 800 workers, and consolidating it into its facility in York, Pennsylvania.

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Former White House economic adviser Gary Cohn, who resigned shortly after Trump announced the tariffs, cautioned earlier this month that a trade war could wipe out the economic gains of the GOP tax law. "Taxes just a Harley excuse - be patient", he said. "It will be a disaster for Harley-Davidson". No H-Ds made in Brazil, India, or Thailand will be available here. It's likely that one or more of these plants will take on the production that leaves the US.

Trump recently imposed steep tariffs on aluminum and steel imported from Canada, Mexico and Europe in his bid to level the trade playing field and reduce trade deficits between the USA and its trade partners. Trump's tariffs also raise costs on imported parts they need to manufacture in the United States.

Harley-Davidson did not respond to requests for comment for this story.

Harley forecast the EU's retaliatory tariffs would cost the company $US90 million ($121 million) to $US100 million ($135 million) a year.

On Monday, the vice president of the European Union's governing body said that Europe and China will form a group aimed at reforming worldwide trade rules. That makes it a symbolic target for foreign leaders looking to hit back at America in a trade war.

An enraged Trump railed against the company in a series of tweets, accusing it of waving the white flag and threatening punitive taxes if it bolted from the US. In April, Harley estimated that Trump's tariffs on imported metal would inflate its production costs by somewhere between $15 and 20 million. Even Harley Davidson is not exercised over the issue and it seeks to expand its footprint overseas. The European Union responded by placing tariffs on bourbon whiskey, jeans, and motorcycles, as Trump's approach to trade negotiations quickly turned into what many fear is becoming an global trade war.

But last month, the Trump administration slapped the tariffs on allies Mexico, Canada and the European Union, prompting the retaliatory tariffs on USA goods.

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