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Trump threatens to heavily tax Harley-Davidson for moving some production out of the country

Harley-Davidson announced on Monday that it will shift production of some of its motorcycles overseas in order to avoid retaliatory tariffs by the European Union in response to U.S. President Donald Trump's tariffs on steel and aluminum imported from the EU. (Drew Angerer/Getty Images)

In an early morning tweet storm, President Donald Trump threatened to tax Harley-Davidson "like never before" if it followed through on its announcement that it would move some production outside the U.S. to avoid new European Union tariffs on the importation of motorcycles from the U.S.

Wait...what tariffs?

The European Union and a small handful of other allies were initially exempted from the steep, global tariffs that the Trump administration slapped on all aluminum and steel imports. Then, on May 31, the White House announced that the exemptions were ending.

The EU retaliated to the new tariffs with tariffs of its own on $3.2 billion in American imports. As part of this tariff rollout, the EU tariff on American motorcycles was raised from 6 percent to 31 percent. Harley-Davidson estimated that these EU tariffs would cost the company between $30 million and $45 million for the rest of 2018, and between $90 million and $100 million for every year after that.

In addition, Harley-Davidson estimated that the tariffs on steel and aluminum would cost it an additional $15 million to $20 million.

What did Harley-Davidson say again?

On Monday, Harley-Davidson announced that it would be moving some of its production outside the United States. In an official statement, the company said:

Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson.

What did Trump say?

Trump tweeted Tuesday, “A Harley-Davidson should never be built in another country-never! 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!”

Trump also tweeted in defense of his tariffs, saying that the EU had “long taken advantage of the U.S.” when it came to trade. “In the end it will all even out—and it won't take very long!”

In another tweet, Trump accused Harley-Davidson of opportunism, saying that it had moved some jobs to Thailand before the tariffs took effect.

Trump was referring to the closure of Harley-Davidson's facility in Kansas City, Missouri, which was announced in January. While Harley-Davidson said that roughly half the jobs would be moved to Pennsylvania and that the opening of a plant in Thailand was unrelated, the union representing the employees claimed that some of the jobs were being moved to the facility in Thailand.

What else?

This latest announcement by Harley-Davidson related only to the production of motorcycles that would be sold to the European Union. Motorcycles sold in the United States would still be made domestically. Because of this, it is unclear what Trump was referring to when he mentioned Harley-Davidson not being “able to sell back into U.S. without paying a big tax.”

The U.S. is the largest market for Harley-Davidson. The EU is the second largest, worth about 16 percent of all sales in 2017.

Harley-Davidson plans to release more information on what exactly the new production plan would look like on July 24.

One last thing…
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