President Trump’s Harley-Davidson Comments Explained – During President Donald Trump’s recent address to congress, your ears might have perked at the mention of Harley-Davidson. The president had met with heads of Harley-Davidson prior to the address, and Trump opted to cite their business case in his discussion of international trade issues facing Americans.
President Trump’s Harley-Davidson Comments Explained
Off-road motorcyclists were likely even more intrigued when Trump started talking about motorcycle tariffs, specifically a 100 percent tax that was making it “very hard to do business with other countries…” also citing the need to “create a level playing field for American companies and our workers.”
The comments made by Trump in the address were somewhat vague, begging the question: Was this an acknowledgement of the “bikes for beef tax” issue the off-road motorcycle community has been rallying against?
BIKES FOR BEEF TAX
Dubbed the “bikes for beef tax,” a proposed U.S. tariff was put forward by the Office of the U.S. Trade Representative (USTR), part of an agricultural trade issue between the U.S. and Europe involving laws limiting the import of American beef. Said to be retaliation to the EU, the U.S. tariff levies some heavy taxes on European goods—mostly food and agriculture-related items such as meats, cheeses and vegetables. But for some unknown reason, motorcycles and two-wheel vehicles under 500cc were lumped into the mix.
Find details of the tariff here.
The tariff dates all the way back to the late 90’s, and it seems to rear its ugly head every time there is an administration change. Each time the motorcycle community opposes it, due to the devastating consequences it would have on the American off-road motorcycle community.
Most imports from major European motorcycle companies such as BMW, Ducati and Moto Guzzi are over 500cc, but companies such as KTM, Husqvarna, Vespa, Beta, GasGas and Piaggio would be devastated by a 100 percent tax.
TRUMP’S COMMENTS ABOUT HARLEY-DAVIDSON
The president broached the topic of motorcycle tariffs by citing the need to “create a level playing field for American companies and our workers,” in his joint address. Yet it was unclear exactly which countries and tariffs he was referring to.
President Trump’s words during his address to congress were as follows:
“At our meeting, I asked [Harley-Davidson representatives], how are you doing, how is business? They said that it’s good. I asked them further, how are you doing with other countries, mainly international sales?
“They told me—without even complaining, because they have been so mistreated for so long that they’ve become used to it—that it’s very hard to do business with other countries because they tax our goods at such a high rate. They said that in the case of another country, they taxed their motorcycles at 100 percent.
“They weren’t even asking for a change. But I am.
“I believe strongly in free trade, but it also has to be fair trade. It’s been a long time since we had fair trade.”
The comments prompted questions in the mainstream media, as well, with many asking what country the president was referring to. The answer was quickly narrowed to India, as it is the only country with a 100 percent tariff on motorcycles. But this revelation seemed to present more confusion, since Harley-Davidson has a plant in India, and would therefore not be subject to an import tariff.
A story by CNN Money titled “Actually, Harley-Davidson Doesn’t Pay India’s 100% Motorcycle Tariff” (http://money.cnn.com/2017/03/01/news/india/trump-harley-davidson-tariff/) threw shade on the topic, pointing out the misaligned facts in Trump’s comments. Other news stories began to surface from publications like Fortune, Forbes and Fox News pointing out similar miscues in the president’s assessment of Harley-Davidson’s international trade challenges.
So what was the deal? Was there a misunderstanding in Trump’s conversation with Harley-Davidson reps? His mention of a 100 percent tax on motorcycles is eerily similar to the U.S. proposed tariff; is there any connection between the two?
We reached out to the Motor Company, seeking clarification on these questions and more, regarding the president’s comments and Trump’s knowledge of the proposed tariff issue, as they understand it.
Harley-Davidson Manager of Communications and Corporate Reputation Katie Whitmore responded to our questions:
Can you clarify what it was H-D representatives spoke to the president about regarding the 100 percent tariff? (i.e., which specific tariff were they discussing?)
Among the issues discussed was taxes in excess of 100 percent in countries like Indonesia and India that place companies like ours at a competitive disadvantage in a global economy. We did not talk about the ongoing agriculture trade issue involving U.S. beef and the EU.
Are these two tariff topics in any way linked?
The topic of trade with countries like India and Indonesia and the proposed tariff for EU motorcycles under 500cc are completely unrelated.
To your knowledge, is President Trump aware of the 100 percent tariff proposed for EU bikes under 500cc? Was that a topic of discussion at all during the meeting at the White House?
We do not have any knowledge of President Trump’s awareness of the 100 percent tariff proposed for EU bikes. It was not a topic of our discussion with the president.
Seeing as how Harley-Davidson has a CKD plant in Bawal, how is the 100 percent motorcycle tariff a factor for H-D in India?
In India, we incur an import tariff of 100 percent on certain motorcycle models manufactured in the U.S. and shipped as completed units—not the CKD motorcycles for the India market that are assembled at our Bawal plant from component kits sourced from our U.S. plants.
The CKD plant in Bawal, India (near New Delhi) refers to a “Completely Knocked Down” assembly unit where bikes are assembled after parts are imported. According to the Harley-Davidson India website, H-D assembles eight of the 13 models it offers in the country at the Bawal plant. It seems the remaining five units are the bikes that are subject to the 100% tax, clarifying the statement made by Trump in his address.
The bad news is that the “bikes for beef tax” was not a point of discussion with the president. Since Harley does not produce bikes under 500cc (aside from the Street 500 with a capacity of 494cc), and does not compete with any of the potentially affected European companies, it’s easy to see why the topic wasn’t on the table.
The good news is that the Motor Company seems to have struck a good relationship with the Trump administration. No matter your feelings about the president or his policies, this could be a good thing. No matter your feelings about Harley-Davidson, they are easily the most recognizable brand in motorcycling, and could now be a potential conduit to the White House for all things two-wheeled. And no matter if you run knobbies or saddlebags, this relationship could prove very significant.
For more on Harley-Davidson’s visit to the White House, check out this interview Harley-Davidson CEO Matt Levatich did with financial publication TheStreet.