Trump rails against Harley Davidson's decision to flee U.S. despite his backing

Harley Davidson to shift production overseas to avoid EU tariffs	 	 	 			Sean Gallup  Getty Images

Harley Davidson to shift production overseas to avoid EU tariffs Sean Gallup Getty Images

On Monday, Harley-Davidson announced that it would shift production of Europe-bound motorcycles out of the United States in direct response to President Trump's senseless trade war.

President Donald Trump threatened motorcycle maker Harley-Davidson with a big tax hit if it moved its manufacturing Thailand. - Harley-Davidson is not looking to import bikes manufactured overseas back to the U.S. The motorcycles made abroad will only sell abroad, while U.S. bikes will continue to be made in the U.S.

The EU imposed retaliatory tariffs last week on $3.4 billion worth of USA products like bourbon, motorcycles and orange juice.The new duties are in direct response to President Trump's decision to increase fees on aluminium and steel coming from Europe.

The announcement came after the EU's retaliatory tariffs against US products in response to the USA tariffs on steel and aluminum imports came into effect on Friday.

Milwaukee-based Harley said Monday that European Union tariffs on its American-made motorcycles jumped between 6 percent and 31 percent as a result of the escalating trade war, adding about $2,200 in cost to the average Harley sold in the EU. It turns out that Harley's decision to open a plant in Thailand came in response to a different challenge created by Trump: his decision to withdraw the United States from the Trans-Pacific Partnership a year ago.

Says Trump: "Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag".

Last year, it also announced it would build a plant in Thailand after Trump pulled out of the Trans Pacific Partnership (TPP) trade deal, which would have abolished tariffs on their motorcycles across 40 percent of the world's economy.

On Monday, the vice president of the European Union's governing body said that Europe and China will form a group aimed at updating global trade rules to address technology policy, government subsidies and other emerging complaints in a bid to preserve support for worldwide commerce.

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

Harley-Davidson shares closed down 0.6 percent at $41.32, after falling almost 6 percent on Monday.

On Tuesday, the president tweeted incorrectly that Harley was shifting its operations in Missouri to Thailand. The company said the shift will require additional investment and could take nine to 18 months to complete.

As U.S. customers age and loyalty to the brand wanes, Harley-Davidson has been aiming to make up for falling U.S. demand by boosting overseas sales to 50 percent of annual volume from about 43 percent.

But, before most people could get a grasp on what's actually happening, the story about trade quickly devolved into one about Trump's angry tweet-slapping against Harley Davidson. The Milwaukee-based company says it made the decision because the higher tariffs the European Union is imposing on motorcycles exported from the U.S. It appears that move has little to do with Monday's decision by the company to move more manufacturing out of the United States.

Harley Davidson said that the company's prices will not rise due to "an immediate and lasting detrimental impact to its business in the region".

But Trump's policies seem to have put Harley-Davidson in a particularly tough spot, for seven reasons.

Earlier this year the White House imposed a 25% tariff on steel and a 10% tariff on aluminium imports from several countries, including the 27-member EU.

The company also warned of a potential "significant impact" from retaliatory tariffs after President Donald Trump announced the steel and aluminum tariffs.

"President Trump will continue to push for free, fair and reciprocal trade, in hopes that the European Union will join us", Huckabee Sanders said.

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