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Trump rips Harley-Davidson as company eyes overseas growth

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27.06.2018 09:14 AM

President Donald Trump renewed his attacks on Harley-Davidson on Tuesday, threatening to tax the company for offshoring manufacturing and saying the iconic American motorcycles should "never" be built outside the United States.

One day after the Wisconsin-based company said it was planning to shift some manufacturing overseas due to the European Union's tariffs in retaliation for US duties, Trump accused Harley-Davidson of appropriating the trade war as an "excuse" for the move.

EU officials, meanwhile, suggested Trump had only himself to blame for the falling-out with a company he had previously hailed as "a true American icon."

The EU responded to US tariffs on steel and aluminum by hitting a series of American products with import taxes, including motorcycles, bourbon and blue jeans.

"We don't want to punish but that is the unfortunate consequence, that (US companies) will put pressure on the American administration to say hey, hold on a minute, this is not good for the American economy," EU Trade Commissioner Cecilia Malmstrom said at a news briefing.

In a series of caustic early-morning tweets, Trump dismissed any notion that his policies were responsible for Harley-Davidson's move.

"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," he said.

"Harley must know that they won't be able to sell back into US without paying a big tax!"

Trump, speaking later at the White House, defended his criticism of Harley-Davidson and said his hard line on trade would yield results.

"Bottom line is that companies are coming back now to negotiate, including (the) European Union that wants to negotiate," Trump said. "Because if they don't, we're going to tax their cars."

Harley-Davidson did not respond to request for comment but has said the move overseas was to avoid EU tariffs, not to sell in the US market.

The company has repeatedly described the Thailand factory, along with other overseas production, as vital to its long-term need to boost foreign markets to make up for sluggish sales in the United States.

Eyeing international growth

Harley-Davidson executives announced the Thailand factory in May 2017 -- not earlier this year as Trump stated on Twitter.

But Harley-Davidson said in January it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania.

A note from Wedbush Securities predicted Harley-Davidson workers would probably suffer "significant layoffs" due to the trade war, which it referred to as "the dangerous game of chicken being played by the Trump administration and foreign trade officials."

Last year, Harley-Davidson announced it would build the Thailand plant after Trump pulled out of the Trans Pacific Partnership trade deal, which would have abolished tariffs on their motorcycles across 40 percent of the world's economy.

"We see tremendous opportunity particularly in Southeast Asia and the investment in the plant in Thailand to get around the egregious tariffs and duties is a part of accessing a very important market," Harley-Davidson chief executive Matthew Levatich said in late April 24.

"We need to be there and be relevant," Levatich said. 

Trump ridiculed the company for building motorcycles abroad.

"A Harley-Davidson should never be built in another country-never!" he said on Twitter.

"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!"

That statement drew criticism from Eurasia Group president Ian Bremmer, who said on Twitter, "If the Germans started saying this about BMWs or the Japanese about Toyotas, that's a whole lot of Americans out of work..."

Harley-Davidson's plight in Europe drew fresh interest from French Parliament member Eric Straumann, who contacted Levatich to propose a new factory on the French-German border in Alsace.

"Our region is well renowned for the quality of its staff and its long tradition in the automobile and mechanical engineering sectors," Straumann said in the letter to the company.

But Wedbush analyst James Hardiman predicted Harley-Davidson was likely to shift the production to India or Thailand because of cheaper labor costs.
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