Harley-Davidson US production a casualty in Trump tariff war

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U.S. President Donald Trump on Monday criticized Harley-Davidson Inc after the company said it would move U.S. production of motorcycles for European Union customers overseas to avoid retaliatory tariffs that could cost the company up to $100 million per year.

Harley-Davidson determined that the tariffs would therefore eat up $30 million to $45 million of the current year's profit.

Harley said increasing production at its overseas global plants would require incremental investments and could take at least nine to 18 months.

European sales of Harley-Davidson motorcycles, the company pointed out, amounted to almost 40,000 bikes in 2017.

"Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally".

The EU's decision to raise tariffs on USA motorcycle imports from 6 percent to 31 percent was seen as an attack on Harley-Davidson.

Trump on Monday expressed disappointment at Harley-Davidson's plan.

Harley-Davidson bikes are lined up at a bike fair in Hamburg, Germany, February 24, 2017. But since then the company has been counting the costs of his trade policy.

American President Donald Trump had frequently embraced the firm as an emblematic U.S. industrial company, but Harley-Davidson's decision to move some work overseas to avoid retaliatory European Union duties left him disappointed.

Tech entrepreneurs are also concerned that the tariffs make it harder to invent the kinds of new products that drive USA innovation.

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Mr Trump says the duties are necessary to protect the USA steel and aluminium industries, which are vital to national security.

Speaking to clients in a daily audio update, UBS Wealth Management's chief economist Paul Donovan described the tariffs imposed by the Trump administration on the European Union and China, as well as retaliatory tariffs from the affected parties as a "19th century tax".

Today Trump is fuming over Harley Davidson's recent decision to move production overseas, according to BBC News.

"Taxes just a Harley excuse - be patient!" he added. Its products imported to Europe originally faced a 6 percent tax, but that number has since risen to 31 percent.

Trump was surprised by Harley's plans but the motorcycle maker has concerns of its own. Wisconsin is the home of Harley Davidson. A company spokesman did not immediately respond to a request for comment.

The company has assembly plants in the United States, India and Brazil, and will open a new plant in Thailand in the summer.

The impact on USA workers because of Harley-Davidson's decision was not immediately clear.

Retaliation by Brussels targeted producers in Republican states where Trump draws much of his support - including bourbon whiskey, Levi's jeans - and is expected to raise the prices of U.S. goods worth up to €2.8bn (£2.5bn). It's unclear at this stage where production outside of the U.S. will be carried out.

The EU's retaliation to Trump's steel and aluminum levies will cost about US$2200 per motorcycle shipped to Harley's second-biggest market in the world, the company estimated in a filing on Monday.

Harley-Davidson said it will not raise its prices to avert "an immediate and lasting detrimental impact" on sales in Europe.