Harley-Davidson is a loser in Trump’s trade war

Harley-Davidson is shifting production of its European-bound motorcycles overseas because of tariffs.

President Donald Trump brought Harley-Davidson executives to the White House soon after his inauguration in 2017 to hold the company up as a major beneficiary of his policies. Now the company is shifting more of its production out of the United States as a result of a fight Trump picked on tariffs.

Harley said Monday it will shift the production of its Europe-bound motorcycles overseas as a result of retaliatory tariffs enacted by the European Union last week. In a regulatory filing with the Securities and Exchange Commission, the company said the EU’s tariffs, a reaction to the Trump administration’s tariffs on steel and aluminum imports to the United States, will add an additional $2,200 to the cost of motorcycles sold in Europe and cost it an additional $30 to $45 million this year.

“To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the US to its international facilities to avoid the tariff burden,” Harley-Davidson said in the SEC filing, which called for government officials and the US to find “sustainable solutions to trade issues and rescind all tariffs that restrict free and fair trade.”

The European Union on Friday put in place tariffs on €2.8 billion (about $3.2 billion) of US imports to Europe, including bourbon whiskey, jeans, and motorcycles.

“We did not want to be in this position,” Cecilia Malmström, the EU’s trade commissioner, said in a statement on the decision. “However, the unilateral and unjustified decision of the US to impose steel and aluminum tariffs on the EU means that we are left with no other choice.”

The EU’s choice to retaliate has been rough news for Harley. After announcing the production shift on Monday, the company’s stock price fell sharply, trading down more than 5 percent by the middle of the day.

Harley already operates plants in Brazil and India. The company has a plant in Australia, which it is closing, and it’s opening a plant in Thailand.

Harley is already laying off workers in the United States

Even before Europe’s retaliatory tariffs, life has not been without troubles for Harley-Davidson in the United States — at least for its workers.

At the start of the year, the Milwaukee, Wisconsin-based company announced it would be closing a plant in Kansas City, Missouri, and subsequently lay off some 800 workers there. It plans to shift production to another plant in York, Pennsylvania, but the plant closure will still lead to a net loss of 350 jobs.

Harley’s Kansas City plant closure has caused collateral damage as well: One of its suppliers, Syncreon, has said it plans to eliminate 207 jobs in August as a result of Harley’s move.

Republicans have held up Harley as an example of American business success. House Speaker Paul Ryan (R-WI) traveled to a Harley-Davidson plant in Menomonee Falls, Wisconsin, in September 2017, while he was trying to sell the GOP’s tax bill, telling workers that tax reform would put American manufacturers on “much better footing” to compete globally. Trump brought Harley executives to the White House in February 2017 and told them his policies, including tariffs and trade, will make them “very happy.”

To be sure, not all of Trump’s policies have been bad for Harley. The tariffs aren’t helping the company, but the tax cut did — the company estimates its effective tax rate (the amount it pays) will be 23.5 to 25 percent this year, about 10 percentage points lower than it would have been otherwise. But Harley’s tax savings isn’t helping workers, it’s going to shareholders. Days after announcing the Kansas City plant closure earlier this year, Harley announced a nearly $700 million stock buyback.