Trump Threatens To Tax Harley-Davidson 'Like Never Before'

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Trump’s new tariffs harmed the company so much that its shares closed down nearly 6 percent and analysts cut the profit forecasts short.

Harley Davidson

UPDATE:

President Donald Trump attacked motorcycle company Harley-Davidson on Twitter Tuesday morning after the company had suggested it would need to move some of its workforce to Europe in response to the president’s trade wars.

Trump’s tariffs on Europe have backfired, causing the EU to put tariffs on American-made goods in response. As a result, Harley-Davidson said they would have no other choice but to produce some motorcycles in Europe, which could result in layoffs in the U.S.

Trump wasn’t having it, and tweeted a threat to the Milwaukee-based company, suggesting that he would tax them as punishment.

The president lambasted the company, saying “they surrendered, they quit!” He also wrote that if they do make the move, “they will be taxed like never before!”

In another tweet, Trump said that the company was using tariffs “as an excuse” to move, citing an earlier announcement of moving some production to Thailand earlier this year.

But Trump forgets that that announcement came about after another trade debacle — when he withdrew the U.S. from the Trans-Pacific Partnership, Harley-Davidson said it was forced to move its production to southeast Asia to meet the demands of that market.

If more jobs move overseas, the real culprit here won’t be the company, but Trump himself. Harley-Davidson is selling more and more of its inventory to customers on the other side of the globe. It cannot do so and make a profit if high tariffs are imposed.

Had the trade wars initiated by Trump not occurred, the company could have made-do with its most of its workforce staying stateside. With tariffs now in place, financially speaking the move makes sense for Harley-Davidson.

Trump is failing economics, but in truth he’s also failing the American workforce. Because he’s an immature leader who governs on his whims, companies like Harley-Davidson and others will have to make more difficult choices like these in the future. Voters will hopefully remember who forced their hands to do so.


U.S. motorcycle manufacturer Harley-Davidson Inc announced it is shifting some of its American production to the European Union overseas in order to avoid EU’s retaliatory tariffs.

The Milwaukee-based motorcycle manufacturer which was founded in 1903 took the decision after President Donald Trump imposed tariffs on steel and aluminum imports from the European Union and NATO members, provoking a “tit-for-tat” response from the trading bloc against U.S. goods.

Under the new tariffs, imported steel will be taxed at 25 percent. Meanwhile, aluminum will be taxed at a 10 percent.

Harley-Davidson stated that the tariffs on motorcycles rose from 6 percent to 31 percent. This meant each exported motorcycle cost an additional $2,200 for the buyer. 16 percent of the company’s sales are to the European market.

As a result, to avoid the additional costs, the heavyweight U.S. motorcycle manufacturer decided to relocate some of its American production overseas.

Trump’s tariffs harmed the company so much that its shares closed down nearly 6 percent and analysts cut their profit forecasts on concerns about how quickly the company would be able to adapt to the 25 percent import duties the European Union began charging on June 22.

In the beginning of May 2018, economic experts had warned the Trump administration of the adverse effects of the tariffs. Harley-Davidson also released a statement at that time and said they support free trade.

“We support free and fair trade and hope for a quick resolution to this issue. We believe a punitive, retaliatory tariff on Harley-Davidson motorcycles in any of our major markets would have a significant impact on our sales, our dealers, our suppliers and our customers in those markets,” the statement read.

As soon as the company announced its decision to relocate, Trump took to his favorite social media tool Twitter to criticize the move.

 

However, the president seems to forget that with his tariffs, he is directly hurting the company he once praised.

“In this administration, our allegiance will be to the American workers and to American businesses, like Harley-Davidson, that were very strong in the 1980s and I remember this — you were victims of trading abuse — big trading abuse, where they were dumping all sorts of competitors all over the place,” Trump said to Harley-Davidson executives in February of 2017.  “And Ronald Reagan stepped in and he put on large tariffs and you wouldn’t be talking about Harley-Davidson probably right now if he didn’t do that.”

Harley-Davidson has plants in Australia, Thailand, Brazil, India and the United States. The company said it will raise investment in its plants overseas but didn’t reveal details.

In May, the United States set stage for a potential trade war with some of its top allies after the Trump administration ended a two-month exemption by hitting the European Union, Canada and Mexico with steel and aluminum tariffs.

Apart from Harley-Davidson, the largest nail producer is also suffering the latest changes. Since Trump slapped the tariffs, Missouri based-company Mid Continent Nail Corporation lost 50 percent of its business in merely two weeks.

The company said it had to lay off nearly sixty of its temporary workers and also fears an additional 200 workers will have to be laid off.

Trump who often touts about making America great again is doing the complete opposite with his actions. If anything, these tariffs are forecasted to have an adverse impact on the economy.

 

 

 

 

Spotlight, Banner: Reuters, Henry Nicholls

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