Moneybox

Trump Attacks Harley-Davidson, Mangles Facts

NEW YORK, NY - JUNE 25: The Harley Davidson logo is displayed on the outside of the Harley-Davidson of New York City store, June 25, 2018 in New York City. The American motorcycle company announced on Monday that it will shift production of some of its bikes overseas in order to avoid retaliatory tariffs by the European Union in response to U.S. President Donald Trump's tariffs on steel and aluminum imported from the EU. (Photo by Drew Angerer/Getty Images)
One way…to Thailand.
Drew Angerer/Getty Images

Donald Trump is now on the warpath against Harley-Davidson, thanks to the company’s announcement this week that it would move some manufacturing overseas in order to avoid becoming a casualty of the president’s intensifying trade war with Europe. The motorcycle maker says it plans to start building bikes for the European market abroad, due to the 31 percent tariff European Union officials imposed on American motorcycles this month, which were a response to Trump’s tariffs on steel and aluminum. Trump expressed his displeasure with Harley-Davidson’s decision via tweet Tuesday morning, and accused the company of using the tariff as a convenient excuse to offshore U.S. jobs.

Much like he did with the Canadian shoe smugglers, Trump seems to be conflating several different stories here. Earlier this year, Harley-Davidson announced that it was shuttering its manufacturing site in Kansas City, Missouri, due to shrinking U.S. demand, and moving some of the jobs there to another facility in Pennsylvania. The company is also opening a plant in Thailand in order to produce more affordable motorcycles to sell in Asian countries, many of which place high tariffs on American-made hogs. (The company’s CEO said he resorted to constructing the new factory as a “plan B” after it became obvious the United States would not join the Trans-Pacific partnership, which would have lowered tariffs on motorcycles). It is not clear that either of these developments have anything to do with Harley’s decision to move its production of bikes for Europe. Nor has the company ever said it was sending any operations from Kansas City to Asia. After Harley announced it was closing shop in Missouri, union members did accuse the manufacturer of plotting to ship production from the U.S. to Thailand, but the company denied this, calling the issues “separate and unrelated.”

Trump also seems to be under the impression that Harley-Davidson is planning to build bikes overseas in order to send them back to the U.S. at cheaper prices. That is wrong, too. Again, the company says it is moving production of bikes for Europe to countries where they won’t face tariffs. It’s also worth noting that Harley-Davidson did not say it was sending that manufacturing to Thailand; it also has factories in India and Brazil, for instance.

Of course, it is possible that Harley-Davidson is lying, that the company has been planning to offshore more of its production all along, and that it’s just using the tariffs as a cover story. One worker told USA Today that 35 percent of the motorcycles assembled in Kansas City were destined for export, which suggests some of its production could be headed abroad (the company never confirmed that number). But it’s just as plausible, in this case, that the company is telling the truth when it says the tariffs drove them to this latest move. Foreign governments have decided to retaliate against Trump’s protectionist measures by targeting iconic American products made in politically sensitive states with tariffs. That puts a giant target Harley, which is based in the swing state of Wisconsin. If the company’s executives believe we’re heading into a long period of conflict over trade, it’s obviously in their best interest to ride the heck out of dodge.