Ryan Warns of 'Escalating Taxes' with Tariffs as Trump Hits at Harley-Davidson

Paul Ryan conducts a news conference in the Capitol

WASHINGTON -- House Speaker Paul Ryan (R-Wis.) said those pushing tariffs have to be mindful of the consequence of escalating taxes as President Trump threatened that Harley-Davidson would be "taxed like never before" for moving some operations overseas.

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 Monday. “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."

Today, Trump followed up with another swing at Harley-Davidson.

"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. Shows how unbalanced & unfair trade is, but we will fix it," he tweeted. "We are getting other countries to reduce and eliminate tariffs and trade barriers that have been unfairly used for years against our farmers, workers and companies. We are opening up closed markets and expanding our footprint. They must play fair or they will pay tariffs!"

"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!" Trump added. "...A Harley-Davidson should never be built in another country-never! Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end - they surrendered, they quit! The Aura will be gone and they will be taxed like never before!"

At a press conference on Capitol Hill today, Ryan stressed in response that "I don't think tariffs are the right way to go."

"I think tariffs are basically taxes, and what ends up happening is you get escalating tariffs, or escalating taxes," Ryan said. "One of the reasons we did tax reform is to make it easier for businesses to keep manufacturing in America and exporting overseas. Because, with taxes, like tariffs, some companies make overseas in order to penetrate foreign markets. That's why we want to lower those barriers."

"There are unfair trading practices, no two ways about it, by other countries," he added. "I think it's in our interest to use other tools to go after those unfair trading practices to stop companies or countries from dumping, from cheating, from stealing, from doing IPR theft and the rest. But I think there are better tools than tariff increases."