Trump Gets Harley Plans Wrong in Attack Over Trade War ‘Excuse’
Trump accused Harley-Davidson of using his trade war with the EU as an excuse to move production overseas.
(Bloomberg) -- President Donald Trump accused Harley-Davidson Inc. of using his trade war with the European Union as an excuse to move production overseas. But his latest attacks on Twitter were factually incorrect about the motorcycle maker’s plans.
A day after Harley said it would shift output of bikes destined for EU markets out of the U.S. to avoid 31 percent tariffs, Trump cited two earlier decisions Harley made to open a new plant in Thailand and close one in Missouri. Trump incorrectly said Harley was moving production to Asia from the U.S., when in fact the expansion in Thailand was unrelated to the closing in Missouri.
Trump also threatened to tax any motorcycles the company ships into the U.S. That’s an empty threat because Harley sells motorcycles in the U.S. from American factories and is unlikely to import additional two-wheelers.
Harley made the decision to build the new Thailand factory to supply markets in Southeast Asia when it was clear the U.S. would abandon the Trans-Pacific Partnership, the free-trade agreement Trump withdrew from in January 2017, Chief Executive Officer Matt Levatich said in an interview with Bloomberg News in April. In a separate move linked to shrinking sales in the U.S. and having too much production capacity for its domestic market, Harley announced in January a plan to shutter its plant in Kansas City, eliminating 260 jobs.
“Early this year Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand,” Trump wrote in a tweet Tuesday. “That was long before Tariffs were announced. Hence, they were just using Tariffs/Trade War as an excuse.”
‘Big Tax!’
Trump wrote in a subsequent post that Harley “must know that they won’t be able to sell back into U.S. without paying a big tax!” The company hasn’t announced any plans to import motorcycles from overseas plants, so it’s unlikely that the president’s threat will turn out to be relevant.
Michael Pflughoeft, a Harley spokesman, didn’t immediately respond to requests for comment on Trump’s tweets.
The EU’s retaliation to Trump’s steel and aluminum levies will cost about $2,200 per motorcycle shipped to Harley’s second-biggest market in the world, the manufacturer estimated in a regulatory filling Monday. The company said it plans to eat much of the added expense, because trying to pass it on to dealers or customers would make an “immediate and lasting detrimental impact” on its business.
Sales Slide
Levatich has been dealing with woes independent of Trump’s trade policies, including a struggle to attract younger buyers in the company’s core home market. U.S. retail sales plunged 12 percent in the first three months of the year, the 13th decline in the last 14 quarters. Overseas sales also have been stalling.
Harley shares fell as much as 2.7 percent to $40.46 on Tuesday, after plunging 6 percent on Monday. The stock’s drop is the worst over two days since the end of January, when the company announced the plan to cut jobs and close the Missouri plant and projected that global sales will decline again in 2018.
Harley’s EU production shift may misfire: Street Wrap
Angry Workers
The International Association of Machinists and Aerospace Workers, which represents workers at the company’s facilities in Wisconsin, Missouri and Pennsylvania, expressed skepticism that the production shift related to the EU tariffs is needed.
“This latest move is in keeping with Harley’s past decisions to open plants outside of North America,” President Robert Martinez Jr. said in an emailed statement Monday. He called the plan the “latest slap in the face to the loyal, highly skilled work force” that builds the company’s bikes.
Trump wrote in another tweet Tuesday that Harley’s employees and customers were “very angry at them.”
“A Harley-Davidson should never be built in another country-never!” he wrote. “If they move, watch, it will be the beginning of the end - they surrendered, they quit! The Aura will be gone and they will be taxed like never before!”
--With assistance from Terrence Dopp, Cecile Daurat and Janet Freund.
To contact the reporter on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net
To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Cecile Daurat
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