Trump Says Harley Move Abroad Would Be ‘Beginning of the End’
(Bloomberg) -- President Donald Trump appeared to turn on an iconic American company he once embraced, accusing Harley-Davidson Inc. of using new tariffs on trade as cover to shift some production abroad as he threatened the motorcycle manufacturer with a "big tax" on bikes imported to the U.S.
"A Harley-Davidson should never be built in another country - never!" Trump tweeted Tuesday. "Their employees and customers are already very angry at them. 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!"
During his first month in office, Trump credited Harley-Davidson workers for having "supported us big league" during the election when he welcomed executives from the company to the White House. But that lovefest ended Monday when the company said in a government filing that it may move some production outside the U.S. in response to European retaliation for the president’s tariffs on imported metals.
Trump went on the attack and that continued Tuesday morning.
"Early this year Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand. That was long before Tariffs were announced. Hence, they were just using Tariffs/Trade War as an excuse. Shows how unbalanced & unfair trade is, but we will fix it," Trump tweeted.
The president followed up by warning the company that goods produced overseas and imported back into the U.S. could be taxed. “Harley must know that they won’t be able to sell back into U.S. without paying a big tax!" Trump said in another Twitter posting.
Harley’s Chief Executive Officer Matt Levatich said in April that the factory in Thailand was a "Plan B" that the company employed after the U.S. abandoned the 11-country Trans-Pacific Partnership free-trade agreement Trump withdrew from last year. He’d said they didn’t relish the investment, which he also said was needed to maintain access to a key market.
The high-profile spat pits the president against one of the best-known manufacturers in Wisconsin, a state of high political importance to Republicans. Trump won the state’s 10 electoral votes by a narrow margin of just over 22,000 votes in 2016, and has repeatedly focused his attention on bolstering the state’s economy while in office.
On Wednesday, Trump is expected to travel to Wisconsin to attend the ceremonial groundbreaking of a Foxconn Technology Group factory set to open by 2020 that proponents say could eventually result in 13,000 jobs. State leaders, including Republican Governor Scott Walker -- who is facing a tough-reelection bid this fall -- offered the LCD display manufacturer up to $3 billion in government assistance for locating the plant in the state.
The early-morning missive from the president marked the second consecutive day Trump took aim at the motorcycle maker, after 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.
Harley shares fell almost 1 percent in early trading Tuesday in New York after tumbling 6 percent Monday, the biggest drop in almost five months. The stock is down 18 percent this year.
On Monday, Trump said he was surprised the motorcycle manufacturer "would be the first to wave the White Flag."
“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," Trump continued. "Taxes just a Harley excuse - be patient!”
In a subsequent tweet, Trump said the U.S. is managing to get other countries to lower existing tariffs and barriers that he said have been in place for years trough bad deals. "We are opening up closed markets and expanding our footprint. They must play fair or they will pay tariffs!" he said in the post.
Michael Pflughoeft, a Harley spokesman, didn’t immediately respond to requests for comment on Trump’s tweets. The White House also didn’t immediately respond to questions about whether the president was seriously planning additional tariffs targeting motorcycles beyond the metals tariffs that have already been announced.
Jack Daniel’s Feels Pinch
European officials have said the U.S. metals tariffs violate international trading rules, and they have threatened to retaliate with levies on iconic American brands such as Harley Davidson motorcycles and Kentucky bourbon, with what appears to be a particular eye toward companies based in regions supportive of the president or represented by top Republican lawmakers. Orange juice levies are likely to impact growers in Florida, while taxes on peanut butter and playing cards could also hit southern regions that have provided Trump a base of support.
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.
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 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 are 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.”
Lawmakers weighed in Tuesday on Trump’s latest tweets.
“What I’m worried about is that it’s just the first of many that we are going to see as a result of tariffs,” Senator Doug Jones, a Democrat from Alabama, told CNN in an interview to discuss Harley’s announcement that it would move some production abroad.
“I don’t know all the details but from what I saw was it would be a $2,200 increase on the final price per bike with these tariffs,” Congressman Adam Kinzinger, Republican of Illinois, told CNN in a separate interview. “That’s going to impact sales.”
“I don’t have a problem with the president taking on China,” Kinzinger added. “But when you also take on Canada and Mexico and Europe at the same time I feel it’s like it’s trying to toss grenades everywhere.”
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