US finishing study on taxing EU car imports: Trump

US President Donald Trump threatened Harley-Davidson with higher taxes and a public backlash over its decision to move production for European customers overseas.
Harley-Davidson motorcycles at a dealership in Massachusetts. Harley-Davidson said on Monday it would move some US production overseas due to the cost of the European Union's retaliatory tariffs on its bikes. But US President Donald Trump said it was
Harley-Davidson motorcycles at a dealership in Massachusetts. Harley-Davidson said on Monday it would move some US production overseas due to the cost of the European Union's retaliatory tariffs on its bikes. But US President Donald Trump said it was an excuse, as the company had already said early this year that it would move much of its plant operations in Kansas City to Thailand.PHOTO: EPA-EFE

He also slams Harley-Davidson's ops move abroad over EU tariffs

WASHINGTON • United States President Donald Trump said yesterday the government was completing a study about increasing import tariffs on cars from the European Union and suggested he would take action soon.

"We are finishing our study of tariffs on cars from the EU in that they have long taken advantage of the US in the form of trade barriers and tariffs. In the end it will all even out - and it won't take very long!" he tweeted.

Last Friday, Mr Trump threatened to impose a 20 per cent tariff on all imports of EU-assembled cars, a month after his administration launched an investigation into whether auto imports posed a national security threat.

The administration imposed tariffs on imports of European steel and aluminium earlier this month and, in response, the EU began charging 25 per cent import duties on a range of US products, including bourbon and big motorcycles like Harley-Davidson's, last Friday.

The dominant player in the heavyweight US motorcycle market said on Monday that it would shift some US production overseas as the retaliatory tariffs could cost it up to US$100 million (S$136 million) per year.

Mr Trump yesterday slammed the decision as "an excuse".

  • $136m

    Cost per year to Harley-Davidson as a result of the European Union's retaliatory tariffs, according to the motorcycle firm.

"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," Mr Trump said in a post on Twitter. Harley had announced the closure of the Kansas City plant in January after its motorcycle shipments fell to their lowest level in six years.

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

In a regulatory filing on Monday, the 115-year-old Milwaukee, Wisconsin-based company said the retaliatory duties would result in an average incremental cost of about US$2,200 per motorcycle exported from the US to the EU. Harley's entry-level bike in France currently costs €7,490 (S$11,900).

Last year, the firm sold nearly 40,000 new motorcycles in Europe, which accounted for over 16 per cent of the company's sales. The revenues from EU countries were second only to that of the US.

"We think Harley's decision to protect EU demand is wise for the long-term health of the market," Baird Equity Research said in a note.

The EU's top trade official yesterday said Harley's decision to shift some manufacturing overseas was a natural consequence of a protectionist US trade policy. "We don't want to punish, but that is the unfortunate consequence," Ms Cecilia Malmstrom told a news briefing.

Mr Trump had threatened to stop trading with India earlier this year over the country's 60 per cent to 75 per cent tariffs on Harley-Davidson motorcycles. India agreed to slash the tariffs to 50 per cent.

But since then the company has been counting the costs of his trade policies. In late April, the firm said Mr Trump's metal tariffs would inflate its costs by up to US$20 million this year.

It said ramping up production overseas could take at least nine to 18 months. It has three assembly plants outside the US - one each in Brazil, India and Thailand. It decided to build the Thai plant after Mr Trump pulled the US out from the Trans-Pacific Partnership free trade pact which would have lowered import tariffs on its bikes in Asia.

REUTERS, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on June 27, 2018, with the headline 'US finishing study on taxing EU car imports: Trump'. Print Edition | Subscribe