Harley-Davidson to shift some production out of United States over European Union tariffs

President Donald Trump and Vice President Mike Pence walk together on their way to greet Harley Davidson executives on the South Lawn of the White House

President Donald Trump and Vice President Mike Pence walk together on their way to greet Harley Davidson executives on the South Lawn of the White House

In a series of tweets Tuesday morning, Trump railed against the company's announcement that it would shift the production of some motorcycles away from the U.S.in order to avoid paying tariffs on exports to the EU.

The company, which sold almost 40,000 motorcycles in Europe previous year, said it planned to absorb those costs rather than pass them on to customers and risk damaging sales.

In response to the USA tariffs, the European Union began charging import duties of 25 percent on a range of US products including big motorcycles like Harley's on June 22.

Trump reminded followers that Harley-Davidson wanted to move their plant operations to Thailand long before the tariffs were announced.

The crisis began when the USA government imposed additional tariffs on steel and aluminium imports from the European Union (EU) region.

Even with President Trump's disapproval, the Milwaukee-based company views offshore production as "the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe". The company maintains facilities in Brazil, India and Thailand where it completes assembly of motorcycles for sales in those and other markets. This percent increase adds almost $2,200 to the cost of an average motorcycle, according to the public filing.

Tariffs will add $30-45 million to the company's expenses this year, amounting to "an immediate and lasting detrimental impact" to its business.

Mr Trump said he was surprised the motorcycle maker had been "the first to wave the white flag".

In January, the company said it would close a plant in Kansas City, Missouri, due to a sharp drop in motorcycle shipments.

Increasing foreign investment in the United States, something Walker was in Washington advocating for at a U.S. Department of Commerce event last week, will also help reduce the trade imbalance and need for tariffs, he said.

Local US media reported in May that a labour union for Harley-Davidson suggested some Kansas City jobs would move to Thailand - a move the company denied. Shares continued their slide in premarket trade Tuesday.

Harley-Davidson said it would raise investment in its worldwide plants, though it did not say which ones, adding that it expected the increase in production to take nine to 18 months.

Struggling to overcome a slump in United States demand, Harley has been aiming to increase sales of its iconic motorcycles overseas to 50 per cent of total annual volume from about 43 per cent now.

It is worth mentioning that Harley could make the decision to shift production because it had chosen, in 2017, to open a new manufacturing plant in Thailand. That will make each bike about $2,200 more expensive to export, Harley-Davidson said.

"When I had Harley-Davidson officials over to the White House, I chided them about tariffs in other countries, like India, being too high, " Trump tweeted.

Milwaukee-based Harley-Davidson said it had made a decision to build the plant in Thailand after Mr Trump pulled out of the Trans-Pacific Partnership, which would have slashed import tariffs. Since then, he's increased tariffs on the EU, Mexico, Canada and China, and promised additional fees in response to any retaliation. "No, it's not surprising at all", said Scott Lincicome, an global trade attorney and an adjunct scholar at the Cato Institute who has been critical of Trump's approach.

Trump's comments Tuesday aligned with union leaders' criticism of Harley.

In January, Harley-Davidson said it would close a plant in Kansas City, Missouri, due to a sharp drop in US demand for its motorcycles, but said it would consolidate work done there into its plant in York, Pennsylvania. "That was long before the tariffs were announced", the President went on.

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