Harley Davidson to begin moving some production overseas

Harley-Davidson to shift some production overseas

The iconic American motorcycle maker has drawn the ire of President Trump by citing new tariffs on European Union products as the reason for moving production to Thailand, India and Brazil.

Harley-Davidson sold nearly 40,000 motorcycles in the European Union previous year, generating revenue second only to the United States sales, according to the Milwaukee-based company. "Their employees and customers are already very angry at them", Mr. Trump wrote in a series of tweets Tuesday morning.

Harley-Davidson plans to move a sizable portion of the motorcycles it produces outside of the U.S., blaming the escalating tariff war for spiraling costs in one of its biggest markets.

Trump said once the company leaves the U.S., it won't be able to return unless it pays a "big tax". Harleys were among the select USA exports the European Union chose to slap tariffs on earlier this month, after the Trump administration implemented tariffs on aluminum and steel.

For the US, Harley-Davidson production isn't changing: the motorcycles sold in the country will still be made here.

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Trump tweeted that Harley-Davidson is just using the tariffs as an excuse.

In January, Harley-Davidson announced that it would be closing its plant in Kansas City and moving leftover production to York, Pennsylvania. The legendary bike-maker says the production decision comes after it was caught between the new steel and aluminum duties imposed by President Trump, and retaliatory tariffs implemented by the European Union. "Harley-Davidson is a true American icon, one of the greats ..." It added that the decision is the only way to operate a viable business in Europe, which Harley-Davidson called a 'critical market'. "We want to take money and put it back in the pocket of middle-class people", he said at the time.

Trump, in March, instituted a tariff of 25 percent on steel and 10 percent on aluminum imports.

FILE PHOTO: Harley Davidson motorcycles are displayed for sale at a showroom in London, Britain, June 22 2018.

Shares of Milwaukee-based Harley-Davidson fell 46 cents, or 1.1 percent, to $41.11 on Tuesday.

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"... We are getting other countries to reduce and eliminate tariffs and trade barriers that have been unfairly used for years against our farmers, workers and companies".

Mr Trump said he has fought hard for the company and was surprised by its plans, which he described as waving the "White Flag". "No, it's not surprising at all", said Scott Lincicome, an worldwide trade attorney and an adjunct scholar at the Cato Institute who has been critical of Trump's approach. With sales stalling in the U.S., Harley-Davidson is increasingly relying on Europe and other overseas markets for growth, Wedbush's Hardiman said. That makes it a symbolic target for foreign leaders looking to hit back at America in a trade war. To avoid this cost, the company will shift to countries where there are lower or no tariffs. We are opening up closed markets and expanding our footprint.

Trump added that the administration is finishing a study on imposing tariffs on cars from the EU.

In the filing, the motorcycle maker stressed that increasing global production to alleviate the burden of tariffs was not the company preference.

Ryan says the US should counter unfair trading practices, but says, "There are better tools than tariff increases".

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