Motorcycle manufacturer Harley-Davidson 'surrendered' in trade war, says Trump

Harley-Davidson’s plans to move some of its motorcycle production abroad have been criticised and was threatened with punitive taxes.
Harley-Davidson’s plans to move some of its motorcycle production abroad have been criticised and was threatened with punitive taxes. PHOTO: EPA-EFE

WASHINGTON (NYTIMES) - President Donald Trump lashed out at one of his favourite US manufacturers on Tuesday (June 26), criticising Harley-Davidson over its plans to move some of its motorcycle production abroad and threatening it with punitive taxes in return.

In a series of tweets on Tuesday, the President accused the Wisconsin-based company of having "surrendered" in Mr Trump's trade war with Europe.

He told Republican lawmakers at a White House meeting that the move amounted to a betrayal, saying, "I've been very good to Harley-Davidson."

"If they move, watch, it will be the beginning of the end - they surrendered, they quit!" the President wrote on Twitter. "The Aura will be gone and they will be taxed like never before!"

A day earlier, Harley-Davidson announced that it would shift some of its production overseas in response to the European Union's new 31 per cent tariff on its imported bikes, which was imposed in retaliation for Mr Trump's steel and aluminium tariffs.

Mr Trump has made clashes with US corporations a staple of his presidency, previously assailing businesses like Amazon and Carrier.

In many cases, business associations and brand experts have counselled companies to maintain a low profile when going up against Mr Trump and wait for his attention to be diverted to another topic.

It is unclear whether that will be the case with Harley-Davidson, an iconic American brand that Mr Trump has frequently celebrated.

Last year, the President invited Harley-Davidson executives to the White House, where he thanked the company for "building things in America".

His affinity for the firm was not lost on the European Union when it looked for retaliatory targets.

On Tuesday, the administration fired back at the European Union and other countries that have imposed retaliatory tariffs, calling them "groundless" and a violation of World Trade Organisation rules.

Mr Robert Lighthizer, the US trade representative, said in a statement that the reciprocal tariffs imposed by Europe, Canada, Mexico and China "do great damage to the multilateral trading system", and he vowed to "take all necessary actions under both US law and international rules to protect its interests".

Earlier on Tuesday, Mr Trump accused Harley of using the trade dispute as an excuse to send more jobs offshore, after the recent construction of a plant in Thailand.

The suggestion echoed the sentiment expressed by one of the unions that represent Harley workers.

Harley developed its Thai plant to mitigate tariffs that are in place in Asia, but it decided to move more production abroad in direct response to the new European tariffs.

Harley has not said where it will build the bikes for the European market or how many jobs it might cut in the United States as a result.

Mr Trump also revived a threat that he used to lob at companies when he was a presidential candidate, warning Harley that it would pay a financial price for moving manufacturing abroad.

"Harley must know that they won't be able to sell back into US without paying a big tax!" the President said in another tweet on Tuesday.

While running for office in 2016, he said on several occasions that if elected he would make Ford pay a 35 per cent tax on cars that it made in Mexico and sold into the United States.

He did not say what presidential authority would give him that power, and the warning on Tuesday appeared to misunderstand - or misconstrue - the fact that Harley would be using its overseas production facilities to sell motorcycles in Europe, not back into the United States.

Overseas markets have become critical to Harley-Davidson, as sales slow in the United States.

The company recently announced plans to consolidate some of its US plants, including closing its factory in Kansas City, Missouri, and merging its operations with one in York, Pennsylvania.

On Tuesday, employees at the York facility said they were sympathetic to Mr Trump's concerns, but also understood the company's need to protect its bottom line.

Many of the workers voted for Mr Trump and still support him, but said the President, in his former life as a businessman, would do the same thing Harley-Davidson was doing to survive.

"Harley-Davidson is as American as apple pie, and the President understands that," said Ms Sue Thomas, who does a variety of jobs at the York plant.

"I believe he's a bit hurt, and those who fly the flag high are understandably disappointed because Harley-Davidson is an American treasure."

But Ms Thomas added: "I know the President believes Harley-Davidson should work with him, but he's a businessman, too, and I don't believe for a moment he wouldn't do this with his business."

Mr David Paige, an 11-year staff engineer at Harley-Davidson, said that what was best for the long-term interests of the business was ultimately best for him, too.

"Harley is doing what Harley needs to do to survive, and that's important to my feeding my family," Mr Paige said.

 
 
 

The President's public attack on Harley is likely to further frustrate Republicans, who have been increasingly worried about the fallout from his trade war.

Speaker Paul Ryan, a Wisconsin Republican, said on Tuesday that the company's move was a sign that unilateral tariffs did not work.

"I don't think tariffs are the right way to go," Mr Ryan said. "I think tariffs are basically taxes, and what ends up happening is you get escalating tariffs, or escalating taxes."

Representative Jim Sensenbrenner, a Wisconsin Republican, urged Mr Trump to take a more targeted approach in his trade negotiations that would protect American workers and businesses.

"It's unfortunate that such a strong Wisconsin company like Harley-Davidson should have to bear the brunt of this trade dispute," he said.

And Senator Ben Sasse, a Nebraska Republican, who is a frequent critic of Mr Trump, defended Harley's patriotism and condemned Mr Trump's trade policies as bad economics.

"This will go over like a Vespa at Sturgis," Mr Sasse said, invoking the scooter brand and the South Dakota site of a large annual motorcycle rally.

"The problem isn't that Harley is unpatriotic - it's that tariffs are stupid."

The company has remained publicly quiet since announcing its manufacturing decision in a public filing on Monday.

The Harley-Davidson Twitter feed has not addressed Mr Trump's concerns, and the company declined to make its chief executive available for an interview.

At the York plant on Tuesday, a man who identified himself only as "the boss" handed out a statement reiterating the Monday filing, which said the shift in operations "represents the only sustainable option" for the company to make its bikes affordable and accessible to European customers.

"Europe is a critical market for Harley-Davidson," the statement said.