Retaliatory Tariffs Drive Harley to Shift EU-Bound Production Overseas

Harley Days, the largest Harley Davidson biker meeting in Germany, in Hamburg on June 22, 2018. (Georg Wendt/picture-alliance/dpa/AP Images)

WASHINGTON — Harley-Davidson is moving production of the iconic motorcycles headed for the lucrative European market overseas, prompting critical reactions from President Trump and from the machinists union.

The company said the move is necessary because of the $3.4 billion tariffs the EU began levying Friday in retaliation for Trump’s 25 percent steel and 10 percent aluminum tariffs. Nearly 40,000 Harleys were sold in the EU last year; the new tariffs on motorcycles jumped as high as 31 percent.

“Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally,” the company said. “Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson.”

The company said it would absorb a near-term financial hit of $30 million to $45 million in order to not raise prices in the EU during the transition.

“Surprised that Harley-Davidson, of all companies, would be the first to wave 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 tweeted.

Asked if Trump still feels that tariffs are the best option, White House press secretary Sarah Huckabee Sanders told reporters Monday that “the European Union is attempting to punish U.S. workers with unfair and discriminatory trade policies, and President Trump will continue to push for free, fair and reciprocal trade in hopes that the EU will join is in that.”

“The president is saying enough is enough,” she said. “We’d like to work with the EU to work on a level playing field.”

International Association of Machinists and Aerospace Workers president Robert Martinez Jr. called Harley-Davidson’s announcement “the latest slap in the face to the loyal, highly-skilled workforce that made Harley an iconic American brand.”

The union represents represents Harley workers in Milwaukee, Kansas City and York, Pa.

“Even before the EU’s announcement, Harley made the decision to close its plant in Kansas City and has manufacturing facilities in India and Brazil. It also announced a future plant in Thailand. This latest move is in keeping with Harley’s past decisions to open plants outside of North America,” Martinez said.

“Will Harley use any excuse to ship jobs overseas? Does Harley even understand what ‘Made in America means?’”