Taxed no matter what you do
When it comes to misguided revenge, Sons of Anarchy has nothing on Donald Trump. The President’s own man-of-mayhem trade policies have forced Harley-Davidson to move some of its motorcycle production overseas. But Mr. Trump responded to this week’s announcement by menacing the company on Twitter Tuesday morning.
“A Harley-Davidson should never be built in another country_never!” Mr. Trump raged. “Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end — they surrendered, they quit! The Aura will be gone and they will be taxed like never before!” In another tweet, the President added, “Harley must know they won’t be able to sell back into U.S. without paying a big tax!”
Taxed if you do, taxed if you don’t. In retaliation for Mr. Trump’s steel and aluminum tariffs, the European Union raised tariffs on U.S.-made motorcycles to 31 percent from 6 percent last week. The $2,200 price hike would be a deal-breaker for many would-be Harley bikers in Europe and would damage the company’s sales.
As motorcycle sales in the U.S. continue to decline, Harley knows it needs to reach a global market. So the company was left with two choices: Avoid the tariff by moving operations abroad, or pay the new EU tax, which will cost the company $90 million to $100 million each year. Keep in mind that Harley is already paying $15 million to $20 million more for manufacturing this year because of Mr. Trump’s tariffs on metal.
Harley chose to live to ride another day, but you can bet its executives didn’t make the decision to relocate lightly. Harley’s American ethic is a big part of its brand, and there was always the risk of Mr. Trump’s Twitter vigilantism.
Meanwhile, Harley is dealing with union backlash for opening a production plant in Thailand while closing one in Kansas City. Harley made that hard call after Mr. Trump withdrew from the Trans-Pacific Partnership last year, though that agreement would have reduced foreign tariffs on American-made motorcycles. Mr. Trump’s TPP decision made it harder for Harley to compete in the Asian market while still using U.S.-based steelworkers and machinists. Cause, meet effect.
We remember how Barack Obama railed against Anthem for raising insurance premiums when Democrats were distorting the health-care market. One might expect that Mr. Trump, supposedly savvier about business realities, would understand how corporations have to make tough choices to survive bad policies. Mr. Trump should rage against the man in the mirror who is the reason for Harley’s choices.
The Wall Street Journal