Trump's half-truths on Harley overseas plans

Harley-Davidson To Move More Production Oversees Amid US-EU Trade Tensions

EU import tariffs force Harley to rethink

Harley made the decision to build the new factory to supply markets in Southeast Asia when it was clear the USA would abandon the Trans-Pacific Partnership (TPP), the free-trade agreement Trump withdrew from in January 2017, Chief Executive Officer Matt Levatich said in an interview with Bloomberg News in April.

The EU's top trade official today said the decision of Harley-Davidson to shift some manufacturing of its iconic motorcycles overseas, which President Donald Trump criticised, was a natural effect of a protectionist USA trade policy. Tuesday for its plan to relocate some of its production overseas by accusing the company of misleadingly using tariffs "as an excuse", and threatened to tax the company "like never before" on any of those motorcycles it tries to sell in the United States.

Trump denied Tuesday that his trade policy was to blame for Harley's decision.

Trump incorrectly connected the two decisions and threatened to tax any motorcycles the company ships into the USA, even though the company is unlikely to import two-wheelers into its home market.

The company said the EU's tariff increase - to 31%, from the current 6% - would increase the cost of every motorcycle shipped from the U.S. to Europe by $2,200. It will instead absorb a significant amount of the cost in the near term, and estimates the cost for the rest of the year to be $30-45 million. The company blamed the move on the tit-for-tat tariffs that began with the Trump administration slapping a 25 percent tariff on steel and aluminum. That was long before Tariffs were announced. "Hence, they were just using Tariffs/Trade War as an excuse", he said.

Increasing foreign investment in the United States, something Walker was in Washington advocating for at a U.S. Department of Commerce event last week, will also help reduce the trade imbalance and need for tariffs, he said. "But tariffs are just a fact of life", he said.

Jobs are also being added across the supply chain in central Pennsylvania due to Harley's expansion, Schreiber noted. Harley-Davidson's India plant at Bawal, Haryana now has a manufacturing capacity of 12,000 units per annum and exclusively manufacturers the Street 500, Street 750 and Street Rod.

As my colleague Rick Newman has written previously, from the outset Trump's actions on trade this year have implicitly chosen which industries and companies would be winners and which would be losers. But that was months before it announced the closure of the Kansas City plant.

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

But Harley actually started its Thailand factory as a result of another Trump policy - his withdrawal from the Trans-Pacific Partnership. Spokesperson Michael Pflughoeft said the company was "assessing the potential impact" on jobs. The company is set to report its quarterly earnings on July 24.

And while Harley-Davidson may appear to be on an island right now, it would seem unlikely that they are the last company to make an investment decision that is net negative for the US economy - either by pulling investment, employees, or both - from the country given the current state of play. Wildly volatile government policies in the last two years (BS3-BS4, demonetisation, GST and duty structure changes to name a few) will certainly make any global business think long and hard before making an investment. Those plants receive many of their parts from Harley's plants in the USA, primarily from Wisconsin.

Harley say that sales are down domestically but that sales are up in Europe, the Middle East, Latin America and Africa.

The company sold almost 40,000 motorcycles in the Europe Union previous year, with sales second only to those in the U.S.

"Harley-Davidson maintains a strong commitment to USA -based manufacturing which is valued by riders globally", the company's filing said.

President Donald Trump spent part of Tuesday morning tweeting about Harley-Davidson, specifically calling out the motorcycle giant's plant in Kansas City.

In response to the USA tariffs, the European Union began charging import duties of 25 percent on a range of US products including big motorcycles like Harley's on June 22.

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