Harley-Davidson to Outsource More US Manufacturing Jobs, Trump Calls Move 'Excuse'

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Rows of motorcycles are behind a bronze plate with corporate information on the showroom floor at a Harley-Davidson dealership in Glenshaw, Pennsylvania, April 26, 2017.

Harley has warned consistently against tariffs, saying they would negatively impact sales.

Trump, however, deflected blame today via a tweet, citing taxes as being nothing more than an excuse on the part of Harley Davidson. The moves have raised the spectre of a full-blown trade war as the Trump administration pursues a protectionist tack with both allies, including the European Union, Canada and Mexico, and rivals, such as China. He has already imposed $50 billion in tariffs on China and threatened another $400 billion. Steel would incur a 25-percent tariff, while aluminum imports would see a 10-percent tariff.

"This latest move is in keeping with Harley's past decisions to open plants outside of North America", President Robert Martinez Jr said in an emailed statement. In the near term, Harley-Davidson will instead absorb most of the cost of moving the production of motorcycles overseas.

Struggling to overcome a slump in U.S. demand, Harley has been aiming to increase sales of its iconic motorcycles overseas to 50 per cent of total annual volume from about 43 per cent now.

Walker says increasing foreign investment will help with the trade imbalance and therefore lead to a reduction in tariffs.

Either way, Harley-Davidson's announcement drew criticism from the White House. "I expect many other companies will be forced reluctantly to move production as Harley has done in order to maintain their viability".

Trump hosted executives from the Milwaukee-based company and the union officials representing its workers previous year at the White House. It did not say how jobs in the United States would be affected. USA motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession.

In the wake of the sluggish United States sales, Harley-Davidson announced in January it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania. "It also announced a future plant in Thailand". The Milwaukee-based company reports that the full-year effect from the tariffs will have an impact of $90 to $100 million.

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"To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for European Union destinations from the U.S.to its worldwide facilities to avoid the tariff burden".

Mr Trump responded to the situation via Twitter, writing that he was "surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag". Shifting manufacturing to the European Union will allow the motorbike maker to avoid that hit-although it will take 9 to 18 months to ramp-up global plants, Harley-Davison says, and in the meantime the company is expecting to lose $30 million to $45 million during the transition. Shifting production to its non-U.

Harley said ramping up production overseas could take at least nine to 18 months.

In February 2017, Trump welcomed Harley-Davidson executives to Washington and viewed a number of the company's motorcycles at the White House.

The president also tweeted on Tuesday morning: "A Harley-Davidson should never be built in another country-never!"

"I think this is only the beginning".

Initial reaction from prominent Republicans on Capitol Hill highlighted unease with the president's tactics.

"This is further proof of the harm from unilateral tariffs", AshLee Strong, a Ryan spokeswoman, said Monday.