Harley-Davidson Using Trade Tensions as Excuse to Move


US President Donald Trump has warned legendary motorcycle maker Harley-Davidson of unprecedented tariffs if the company moves part of its production overseas.

To prevent this damage in the short term, Harley have said they will not raise their prices, instead they will bear the financial impact of the tariffs, estimating them to cost between $30 - 45 million (£22 - 33 million) for the remainder of 2018.

The company, which sold almost 40,000 motorcycles in Europe past year, said it planned to absorb those costs rather than pass them on to customers and risk damaging sales.

He then warned: "If they move, watch, it will be the beginning of the end - they surrendered, they quit!"

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. The region accounted for 16 percent of Harley Davidson's global sales a year ago. But most of its motorcycles sold in Europe are now manufactured in the US, he noted in a research report.

Fellow Republican Gov. Scott Walker is echoing those comments.

The EU is "attempting to punish USA workers with unfair and discriminatory trade policies", White House Press Secretary Sarah Huckabee Sanders said.

Harley's move is an example of what economists say will be a significant long-term problem with the tariffs and represents a black eye for Trump's arguments in favor of the measures.

Johnson is also a former employee of Harley Davidson in West Fargo, where he was a parts manager for 14 years. The plant also enables CKD assembly of a number of bigger motorcycles from Harley's Sportster and Softail families.

The Wisconsin-based motorcycle manufacturer, Harley-Davidson, has announced plans to relocate its production for European Union exported items away from the US.

Europe is its second-largest market behind the United States.

Its Kansas City factory closure isn't tied to shifting jobs overseas. In fact, Harley-Davidson said it was shifting those Kansas City jobs to another factory in the US - in York, Pennsylvania. USA consumers will do the same when buying products made with imported steel.

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In Trump's view, his relationship with Harley-Davidson - company executives visited the White House in February 2017 - ensured the company would play ball with the administration's economic agenda.

Harley-Davidson isn't halting manufacturing in the U.S.

In 2017, almost 40,000 riders bought a Harley-Davidson motorcycle in Europe, accounting for more than 16% of the company's sales previous year. "The problem isn't that Harley is unpatriotic; it's that tariffs are stupid", the Nebraska senator said.

But, before most people could get a grasp on what's actually happening, the story about trade quickly devolved into one about Trump's angry tweet-slapping against Harley Davidson.

A spokeswoman for House Speaker Paul Ryan, of Wisconsin, says Harley's decision is "further proof of the harm from unilateral tariffs".

Trump responded to that Tuesday morning with a blistering statement threatening the company with a tax if it failed to do as he wanted. "What ends up happening is you get escalating tariffs and end up raising taxes". "This is not good for the American economy.' And that's what's happening", Malmström told reporters, adding "there has to be consequences if you do not respect worldwide global rules".

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 chose to move production elsewhere.

However, the OEM is facing political pressure from the president who Tweeted about the company on Tuesday.

Harley-Davidson is struggling with big issues in its home market. Last month the Milwaukee Journal Sentinel spoke with Richard Pence, a machinist at the H-D Kansas City plant for 21 years.

Payne explained that it will cost the company $200 million to close the Kansas City plant and open a new one in Thailand.

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.