Here's What's Really Going On With Harley-Davidson, Trade Tariffs, and Donald Trump

One of America's most iconic companies finds itself in the middle of a trade war—and at the mercy of the president.

Harley-Davidson can’t even catch a break from its most powerful cheerleader. After the iconic American brand announced it would be shifting some of its production overseas in order to counter new E.U. tariffs—themselves a response to U.S. tariffs on European steel and aluminum—President Donald Trump slammed the company today on Twitter over the planned move.

As usual, it took more than 280 characters for the president to express himself. In the interest of providing full context, here's the whole rant.

So you can see that President Trump's series of tweets was mostly more of the same: defending his use of tariffs, pointing out that the rest of the world uses tariffs, and patting himself on the back for other countries reducing their tariffs and bringing down trade barriers. But Trump wasn't quite done with his remarks about Harley-Davidson this morning. Here's the punchline:

All right then. There are a lot of reasons why H-D can't build every single bike they sell worldwide in the United States, one of the biggest being trade tariffs. For example, India is a rapidly-growing motorcycle market and they have huge taxes on imported motorcycles from America. For that very good reason, Harley built a plant in India to produce motorcycles for the Indian market.

It's also kind of silly to think that Harley-Davidson is going to import any bikes that it builds overseas into this country. The brand still has the manufacturing capacity to build every bike it sells in the U.S. right here at home, as Reuters confirms. That's to say nothing of the enormous selling point of "Made in the USA" which is very important to H-D's fiercely loyal and often patriotic fan base.

So there are a few misleading statements in the President's tirade of tweets, but let's go back to something he said in the very first one. Trump points out that earlier this year, "Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand." To refresh your memory, H-D is shutting down its manufacturing facility in Kansas City, which is expected to result in a net loss of about 400 jobs as some of the manufacturing gets rolled into the company's Pennsylvania plant. "That was long before the tariffs were announced," the President went on. "Hence, they were just using Tariffs/Trade War as an excuse."

Digging Deeper

But is work from the Kansas City plant really moving to Thailand, or is the President taking a cheap shot? If former employees at the Harley-Davidson Kansas City plant are to be believed, there is some truth to this point. Last month the Milwaukee Journal Sentinel spoke with Richard Pence, a machinist at the H-D Kansas City plant for 21 years. "Part of my job is being moved to York, but the other part is going to Bangkok," the union worker told the Journal Sentinel.

Pence even said that some of the equipment from Kansas City was being packed up and shipped to the new Thailand plant. "We have been fighting tariffs for the 21 years I have been employed with the company. But tariffs are just a fact of life," he said. Remember, this was in early May and long before the new E.U. tariffs were announced, which is the main reason H-D is citing for shifting more production overseas. But if you ask Harley-Davidson, there's no connection between Kansas City and Thailand.

"The plant under construction in Thailand is a separate and unrelated issue. Part of our long-term strategy is to grow our international business to 50 percent of our annual volume by 2027. The Thailand facility will allow us to be competitive and provide riders greater access to our brand and our products in an expanding global marketplace," the company said, according to the Journal Sentinel. "Increasing production capacity in Asia is consistent with the company’s long-term strategy to focus on growth internationally. It is not intended to reduce U.S. manufacturing."

Hitting Harley Where it Hurts

Despite that denial, the question that President Trump raised in his first tweet is still unanswered. Is Harley-Davidson using the new E.U. tariffs as an excuse for shifting production overseas? It only takes a quick look at social media to see the announcement has been widely panned by H-D's patriotic fan base, so if it was the plan all along, it would make sense to try and shift the blame. As we pointed out, there aren't going to be any Harleys sold in the United States that aren't made here, but it's still rubbing brand loyalists the wrong way. As for the company's true motives, there's no way to know for sure.

And now that the president is talking trash about Harley-Davidson, it's going to be interesting to see where loyalties lie for the significant number of people who were previously fans of both. Could Trump's tweets make a dent in H-D sales? Are we going to see aggrieved Harley owners switch to Indian, another stalwart of the American motorcycle industry? It would be a shame for Harley-Davidson if it lost business based on a misleading statement about foreign-built motorcycles being sold here. For more than a century, the company has been an icon not just in motorcycle culture but in American culture at large. It has a unique identity plus millions of passionate riders.

Another thing we need to ask is whether Harley-Davidson would be in the trouble that it's in now had it taken a different direction in recent years to counter the fact that its core fan base is aging and not being replaced with enough young people. With the exception of my twentysomething buddy who just picked up a used V-Rod, every Harley owner I know is eligible for an AARP card. I've been beating this drum for a while now, but it bears repeating: millennials who aren't interested in the brand now aren't going to magically become fans as we age. It's going to take a serious overhaul—and a lot more than an electric bike—to get the company out of its slump.

Harley-Davidson can blame its woes on tariffs or an industry-wide sales slump, but Indian, BMW Motorrad, Triumph, and Ducati are all appealing to young riders with exciting, modern bikes and seeing growth because of it. But the hill may be a little steeper now thanks to President Trump, who might want to take it easy on the half-true tweets before further damage is done to an iconic American brand.