Trump accuses Harley-Davidson of waving 'white flag'

Logo of U.S. motorcycle company Harley Davidson

Harley-Davidson to shift some production out of US over EU tariffs

The United States earlier this month imposed tariffs on steel and aluminum imports from the European Union, provoking a "tit-for-tat" response from the trading bloc against USA goods.

European officials last week imposed stiff tariffs on a wide range of US -made goods sold within the European Union.

The announcement, made in a public filing, is an early sign of the financial cost to companies on both sides of the Atlantic as the United States and Europe impose tariffs and counter-tariffs on each other. Harley-Davidson say the tariffs will result in approximately $2200 (£1650) being added to the export cost of each motorcycle.

Harley estimated facing US$30 million to US$45 million in costs linked to the tariffs for the remainder of 2018.

U.S. President Donald Trump criticized bike maker Harley-Davidson after the company said it would move U.S. production of motorcycles for European Union customers overseas to avoid retaliatory tariffs.

Harley-Davidson said that shifting targeted production from the U.S.to global facilities could take at least nine to 18 months to be completed.

"Harley-Davidson maintains a strong commitment to US -based manufacturing which is valued by riders globally", executives said.

Harley Davidson says with the new tariffs in place, it will cost them more than $2,000 to send each bike to Europe, so they are going to move the production of motorcycles for European customers overseas. While Harley said it's committed to making motorcycles in the U.S., it suggested it had no other choice but to move production from its home market. Harley reports it will share more information on this shift in its second-quarter conference call set for 8 a.m. July 24.

It had already announced plans to close a plant in Kansas City, Missouri - a decision which workers claimed was due to the opening of a new facility in Thailand.

Economists said Harley's decision to shift production outside of the U.S. is a predictable result of Trump's increased trade restrictions and, likely a sign of things to come.

"If Trump's trade policies are leading an iconic company like Harley-Davidson to move production out of the United States, then who exactly is benefiting?"

The US President was so upset with the American firm he made a decision to dedicate a whole Twitter rant to it.

More potential pitfalls for Harley-Davidson and other USA manufacturers could be on the way.

Harley said ramping up production overseas could take at least nine to 18 months. He continued on to say that the European Union would "do what we have to do to rebalance and safeguard" against the tariffs.

Forthcoming layoffs from Harley Davidson are expect.

The statement seemed to suggest that the president expects to negotiate a resolution of his complaints about EU trade practices, which he blames for the $151 billion USA merchandise trade deficit with its European allies. While such a deal might still happen, trade tensions with China are likely to intensify this week as the USA gets set to announce investment restrictions meant to keep key technology out of Beijing's hands.

More potential pitfalls for Harley-Davidson and other US manufacturers could be on the way. To avoid this cost, the country will shift to countries where there are lower or no tariffs. US motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession. That will make each bike about $2,200 more expensive to export, Harley-Davidson said.

In February 2017, Trump welcomed Harley executives and workers to the White House, where he celebrated the company's success and predicted more to come.

But that status made the company a target for European Union retaliation along with bourbon and blue jeans.

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