Harley move to shift operations shows US facing consequences of tariffs: EU

The company is shifting some production of motorcycles for European customers out of the United States to avoid EU retaliatory tariffs

The EU's top trade official today said the decision of Harley-Davidson to shift some manufacturing of its iconic motorcycles overseas, which President Donald Trump criticised, was a natural consequence of a protectionist US trade policy.

"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 told a news briefing.

US President Donald Trump, however, accused motorcycle maker Harley-Davidson Inc on Tuesday of using trade tensions over tariffs as an excuse to move production for European customers overseas.

"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," Trump said on Twitter.

"When I had Harley-Davidson officials over to the White House, I chided them about tariffs in other countries, like India, being too high. Companies are now coming back to America. Harley must know that they won't be able to sell back into U.S. without paying a big tax!"

Harley-Davidson said on Monday it would move production of motorcycles shipped to the EU from the United States to its international facilities and forecast the trading bloc's tariffs would cost the company $90 million to $100 million a year.

The Trump administration imposed tariffs on imports of European steel and aluminium earlier this month, and in response, the European Union began charging import duties of 25 per cent on a range of U.S. products including big motorcycles like Harley's on June 22.

Trump responded angrily to the Harley-Davidson's announcement on Monday, saying he has fought hard for the 115-year-old Milwaukee-based company and was surprised by its plans, which he described as waving the "White Flag."

"I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse - be patient!" Trump said in a post on Twitter on Monday night.

Harley-Davidson, the dominant player in the heavyweight U.S. motorcycle market, said it would not pass on any retail or wholesale price increases in the EU and instead focus on shifting some U.S. production.