Milwaukee-based motorcycle manufacturer Harley-Davidson is shifting some of their production out of the U.S. after the European Union issued retaliatory tariffs on American goods.
In a filing Monday, the company stated that the EU tariffs on exported motorcycles from the U.S. rose from 6 percent to 31 percent, making each bike about $2,200 more expensive to export. Harley-Davidson estimates costs related to the tariffs to come out to about $30 million to $45 million for the rest of 2018 and about $90 million to $100 million annually. The European market accounts for roughly 16 percent of Harley’s sales.
Rather than raise their prices, the company is moving their business elsewhere.
This is exactly what both economic experts and Harley-Davidson warned could happen after President Trump announced his decision to impose tariffs on steel and aluminum imports from EU and NATO members. The White House’s chief economic adviser, Gary Cohn, even resigned over debate on the issue.
“We support free and fair trade and hope for a quick resolution to this issue,” the company said in a statement at the beginning of June.
“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.”
House Speaker Paul Ryan cautioned against the tariffs: Harley-Davidson is based out of Wisconsin, his home state.
“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” said AshLee Strong, Ryan’s spokesperson. “The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”
In the past, Trump has thanked Harley-Davidson executives for “building things in America.”
“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.”
While Reagan did raise tariffs on Japanese motorcycle companies like Honda, Kawasaki, Suzuki, and Yamaha in an effort to save the struggling Harley-Davidson, there is debate over how much the tariffs actually helped the company.
Ironically, Trump’s actions are directly harming the company he praised. As recently as May, Harley-Davidson has been forced to move some U.S.-based manufacturing jobs overseas to India and Thailand.
Republicans, however, are spinning this in a way that makes the president out to be a master negotiator whose techniques are beyond lawmakers’ or voters’ comprehension, but worthy of their implicit trust.
Rep. Ron DeSantis (R-FL), a Trump-backed gubernatorial candidate in Florida, appeared on Fox Business News Monday morning to say “Trump’s goal isn’t to have higher tariffs, I think he’s using this as part of the art of the deal” suggesting the president is playing 4-dimensional chess when it comes to trade.
Fox News has been spinning today’s news in a way that puts the blame on Europe, not the United States, for imposing the tariffs in the first place.
“The real American effects of Europe’s tariffs,” Fox News’ Sandra Smith said Monday. “Harley Davidson forced to take action after the EU hit back at America.”