President Donald Trump has threatened Harley-Davidson with huge taxes if the motorcycle maker makes good on its intentions to move some of its production overseas. The president said in a tweet that the company will be “taxed like never before” if they decide to pursue this move. According to Trump, the iconic American company is using the existing trade tensions as an excuse to justify planned changes in its manufacturing strategy.
The president thinks that a Harley-Davidson factory should never be built anywhere else other than the US. He said that many “employees and workers are already angry at the company.” Trump warned that any attempt by the motorcycle maker to move its production will mark the beginning of its end. Trump was also quick to point out that Harley-Davidson had already signaled its intentions to move production from the US to Thailand earlier this year. The President said that at the time there were no tariffs and as such, he maintained that there was no real justification for moving production now.
Harley-Davidson revealed on Monday its plans to move some of its production overseas. The company cited increased cost of production in the US resulting from the retaliatory tariffs imposed by the EU on US manufacturers. The EU is responding to a protectionist policy by the Trump administration that slapped import tariffs on steel and aluminum coming from other countries.
The company also confirmed that it’s not going to move any production into the European market. Instead, the company will rely on some of its other overseas production units located in Brazil, Thailand, India, and Australia. Harley-Davidson had announced earlier this year that it would build a new plant in Thailand in order to reach the South East Asian market. The company’s CEO said in an interview with Bloomberg that the decision to open a plant in Thailand was in part inspired by Trump’s decision to remove the US from the Trans-Pacific Trade Agreement. Thailand has imposed a tariff of up to 60% on imported motorcycles. Producing the Harley-Davidson motorcycle in the country ensures that this problem is solved.
Harley-Davidson has also launched an ambitious plan to grow its international business by nearly 50% before 2027. But a lot closer home, the company is in the process of shutting down a key manufacturing plant in Kansas City. Operations will be transferred to York in Pennsylvania. Local unions claim that some of the work done on the Kansas City factory is moving to Thailand.
Things haven’t been easy for the motorcycle company though. Although an iconic brand in the US, Harley-Davidson has reported a massive decline in sales over the last few years. The company’s stock has also dropped almost 25% this year as uncertainty continues to cloud its future. This latest confrontation with the US president will not help things at all. It’s also not clear if current trade tensions between the US and other countries will abate. Until then, many US companies will have to adapt to the new state of affairs.