U.S. President Donald Trump, center, shakes hands with Matthew Levatich, chief executive officer of Harley-Davidson Inc., right, as U.S. Vice President Mike Pence, smiles, outside of the White House in Washington, D.C., U.S.(Photographer: Drew Angerer) 

Trump Says Harley ‘First to Wave White Flag’ in His EU Trade War

(Bloomberg) -- Donald Trump accused Harley-Davidson Inc. of surrendering in his budding trade war with the EU after the company said it would relocate production outside the U.S. in response to European retaliation for the president’s tariffs on imported metals.

“Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag,” Trump said in a tweet shortly after departing the White House on the presidential helicopter. “I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse - be patient!”

The company said in an SEC filing on Monday that tariffs enacted by the European Union in response to Trump’s penalties on imported steel and aluminum would add as much as $100 million a year to its costs.

“To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the U.S. to its international facilities to avoid the tariff burden,” the company said.

White House press secretary Sarah Huckabee Sanders downplayed the announcement earlier Monday, saying Trump’s “trade and economic policies have been a huge benefit to the American economy.”

“The European Union is attempting to punish U.S. workers with unfair and discriminatory trade policies, and President Trump will continue to push for free, fair and reciprocal trade in hopes that the EU will join us in that,” Sanders told reporters at the White House.

Jack Daniel’s Feels Pinch

Tariffs have also forced the hand of the maker of another iconic American brand, Jack Daniel’s.

Brown-Forman Corp., which also produces Woodford Reserve and other bourbons, will have to raise prices for its whiskey sold in the European Union following the implementation of a 25 percent tariff, according to spokesman Phil Lynch. The higher prices, which he said would primarily affect Jack Daniel’s, would amount to about a 10 percent increase for consumers.

Lynch did not say what effect the expected price increases would have on European sales, noting that “we continue to invest behind the growth of American whiskey in the EU.”

Brown-Forman fell to its lowest level in almost seven months on Monday.

Harley shares fell 6 percent, the biggest drop in almost five months, to close at $41.57. The stock is down 18 percent this year.

The EU’s levies are only the latest blowback Harley has faced from Trump’s trade policies. A year after Trump pulled the U.S. out of a 12-nation trade deal, the Trans-Pacific Partnership, in January 2017, Harley announced it would close its factory in Kansas City, Missouri, and consolidate production in York, Pennsylvania, eliminating about 260 jobs.

Trump hosted Chief Executive Officer Matt Levatich and other Harley executives and union leaders for a White House listening session in February 2017 and hailed the motorcycle manufacturer as “a true American icon” and “one of the greats.”

Ryan Weighs In

“Thank you, Harley-Davidson, for building things in America,” Trump said at the time. “I think you’re going to even expand. I know your business is now doing very well and there’s a lot of spirit right now in the country that you weren’t having so much in the last number of months that you have right now.”

Harley-Davidson’s headquarters is in Milwaukee, and on Monday the office of House Speaker Paul Ryan, a Wisconsin Republican who has opposed Trump’s move to impose tariffs, said the company’s announcement was evidence of the detrimental effect of the president’s trade policy.

“This is further proof of the harm from unilateral tariffs,” AshLee Strong, a Ryan spokeswoman, said Monday. “The best way to help American workers, consumers, and manufacturers is to open new markets for them, not to raise barriers to our own market.”

©2018 Bloomberg L.P.

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