Harley-Davidson caught in trade war’s friendly fire

Harley-Davidson’s move out of the US has angered Donald Trump.

Two ageing Harley-Davidson riders in Milwaukee, where the company has a factory. Picture: Reuters

Few symbols so potently encapsulate American power, wealth, freedom and consumerism, but the Harley-Davidson motorbike soon may symbolise something else entirely: the cost of Donald Trump’s trade war.

The US President’s tariffs on steel and aluminium from China and other countries were meant to be about sticking up for manufacturers and jobs in America’s industrial heartland. They were a key plank in Trump’s campaign vow to “make America great again”.

But Harley-Davidson became an early casualty of his protectionist push, revealing yesterday more production will shift overseas to avoid retaliatory EU import tariffs.

The Milwaukee-based company said the average cost of a ­motorcycle it exported from the US to the EU had jumped by $US2200 ($2965) because of the EU’s increase in tariffs on US motor­cycle imports from 6 per cent to 31 per cent.

Rather than pass on that cost to consumers, Harley says it will shift production of motorcycles it sells in the EU outside the US over the next 18 months.

That may mean more jobs for Harley’s factories in Manaus, Brazil; Bawal, India; and Rayong, Thailand; but fewer in its factories in Kansas City, Missouri; York, Pennsylvania; and Menomonee Falls and Tomahawk, Wisconsin.

The South Australian government says it will push to keep open an Adelaide factory that made Harley wheel rims. The company announced in January that it was closing.

Harley spokesman Michael Pflughoeft says: “Expanding international production to alleviate the EU tariff burden is not our preference but it’s the only sustainable option we have to make motorcycles available and affordable to EU customers.’’

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!

— Donald J. Trump (@realDonaldTrump) June 26, 2018

Missouri, Pennsylvania and Wisconsin voted for Trump in the 2016 US election. Little wonder the President is fuming, ­accusing the company, founded in 1903, of surrendering before the trade war has begun.

“Surprised that Harley-Davidson, of all companies, would be the first to wave the white flag,” Trump tweeted yesterday. “I fought hard for them and ultim­ately they will not pay tariffs selling into the EU, which has hurt us badly on trade. Taxes just a Harley excuse — be patient!”

The company, however, suggested it could ill afford to do otherwise as it seeks to increase overseas sales to compensate for flagging domestic ridership.

Harley-Davidson is already consolidating US

Europe is a significant part of those plans. Almost 40,000 new Harley-Davidson motorcycles were purchased there last year, making the continent second only to the US in terms of revenue.

EU trade officials, who also have slapped additional tariffs on other strong US products, including Levi’s jeans and Kentucky bourbon, declined to comment about Harley’s plans.

The White House defended its trade policy. “The EU is attempting to punish US workers with unfair and discriminatory trade policies,” press secretary Sarah Sanders said yesterday. “President Trump will continue to push for free, fair and reciprocal trade in the hopes the EU will join us in that.”

Harley, whose loud and distinctively styled V-twin machines are famous worldwide, urged US and EU officials to ease tariffs.

International sales rose for the first time in more than a year in the first quarter. The company hopes to boost overseas business to half of its annual sales across the next decade, from about 40 per cent currently.

However, domestic sales fell 12 per cent in the same quarter.

In fairness to Trump, Harley was already planning to shrink its US manufacturing base. Earlier this year the company said it would close a factory in Kansas City and consolidate production at plants in Wisconsin and York.

Peter Fonda and Dennis Hopper in the 1969 film Easy Rider, which inspired a generation of riders.

Joe Capra, of the International Association of Machinists union in Kansas City, says Harley’s response to the EU tariffs and the company’s plan for a plant in Thailand confirm it aims to siphon production from the US.

Harley-Davidson says it remains committed to making motorcycles in the US but has to expand its customer base.

Pittsburgh Harley dealer ­George Gatto has mixed feelings. Harley needs to do whatever it takes to stay competitive, he says. “I am a big proponent of made in USA and good-paying union jobs,” he says. “People with these jobs are many times the same people who buy and ride Harley-Davidson motorcycles.”

Additional reporting: Agencies