Trump Threatens Taxes On Harley-Davidson 'Like Never Before' If It Moves Overseas

By  Patrick George

Good morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories that are your air, that you need to know to live.

1st Gear: The Trump-Harley War Continues

It's fair to say America's most iconic motorcycle company has had enough damn problems lately well before it became President Donald Trump's punching bag du jour. Harley-Davidson doubled-down on Baby Boomers to the point where it's struggling with a declining and aging customer base, and now faces a plant closure and layoffs on top of sliding profits. Now the European Union has decided to target Harley for increased tariffs in response to Trump's trade war, tariffs aimed right at the American heartland and the president's base.

In response to those EU tariffs, Harley has said it will move some bike production to Europe, since it is a business after all and has to make money somehow.

That was yesterday. Naturally, the president had a lot to say about it since. I'll try and go in order, starting with the one that feels almost conciliatory:

Be patient, he says! But then:

Oh no, this was always going to happen. But the president made clear (sort of?) that the Motor Company will face a "big tax" unless it builds here:

And finally:

It's true that Harley had the Thailand plant planned since at least last year, but the company specifically said on Monday that it was considering European production in response to European tariffs—and those tariffs were sparked by the president himself. So how does Harley win here?

Anyway, between this and the threatened 20 percent tariffs on all European-built cars, the automotive industry is having a really great time right now.

2nd Gear: How Much Is This Gonna Cost Harley?

Can't Harley-Davidson just eat the cost and deal with it? Not on top of the increased metal tariffs, reports Reuters:

The company said it expects the tariffs to result in incremental costs of $30 million to $45 million for the rest of 2018 and $80 million to $100 million on a full-year basis.

[...] Trump vowed to make the iconic motorcycle maker great again when he took office last year. But since then the company has been counting the costs of his trade policies.

In late April, Harley said Trump's metal tariffs would inflate its costs by $15 million to $20 million this year on top of already rising raw material prices that it expected at the start of the year.

It sucks more than ever to be Harley.

3rd Gear: Europe Threatens Payback

Of course, the Europeans aren't going to take the auto tariff threats lying down. Here's a French trade official threatening more tariffs in response to ours on aluminum, steel and cars, via Reuters:

Europe will hit back if President Donald Trump follows through with a threat to slap import tariffs on European-made cars, France's finance minister said Monday.

Trump escalated already burning trade tensions on Friday by threatening to hit all imports of cars assembled in the European Union with a 20 percent tariff.

The threat comes shortly after the United States imposed tariffs on European-made steel and aluminum in a move Washington's NATO allies blasted as unjustifiable.

"If the United States hits us again with a 20 percent increase on cars we will respond again. We don't want an escalation, but we are the ones being attacked," Bruno Le Maire told the Anglo-American Press Association.

It's not clear what items he has in mind, but it obviously won't be French cars since we Americans don't get any of those. But there's other ways the Europeans can hit us back. Isn't this an exciting time, kids?

4th Gear: Audi's CEO Is Still In Jail In Case You're Curious

The most high-profile executive facing prosecution in Volkswagen's endless diesel cheating scandal is Audi CEO Rupert Stadler, under investigation for allegedly threatening to suspend an employee who testified in the ongoing criminal case. He's still in jail and will be for at least another week for additional questioning.

As a result, Audi is pushing back the unveiling of its first full-electric car, and moving it to the U.S. instead, reports Automotive News:

Audi has cancelled a marketing event in Brussels where it was due to launch its first purpose-built electric vehicle after the arrest of CEO Rupert Stadler put a shadow over Volkswagen Group's premium brand in Europe.

Audi was scheduled to unveil the e-tron crossover on Aug. 30 during a glitzy full-day event in Brussels where it will be built. Journalists had received invitations to the launch.

On Monday, Audi said it would hold the marketing event, which it calls a "summit," in the U.S. instead of Brussels at a later date. It cited "organizational reasons" and did not give a date or place for the U.S. event.

The postponement likely means that rival Mercedes-Benz will be the first German automaker to celebrate the public debut of a Tesla fighter. Mercedes will unveil its EQC in Stockholm on Sept. 4.

We weren't invited anyway.

Good luck in jail, Rupert!

5th Gear: What If The Detroit Auto Show Becomes A Showcase For China?

People in the Motor City fear for the importance of the Detroit Auto Show, which is still a major local event but is losing its luster as a showcase of new products and industry news. Mercedes, BMW and Audi won't even be there in 2019.

More than likely it will move to a less frigid month than January in the coming years, but The Detroit Free Press's Mark Phelan has an idea on how it can stay relevant: show off the newcomers to the U.S. market, as well as the best of the Big Three:

DADA wants the show to remain a leading stage for automakers and tech companies to show off vehicles and innovations. To do that, they should remember what worked last time they reinvented the show: Look to Asia.

The rebooted Detroit auto show should go all-out to host the unveilings of established favorites such as the Toyota Camry, Lexus LS, Honda Odyssey, hot newcomers like the Kia Stinger and Genesis G90, and of course local heroes from Ford, Cadillac, Chevy, Jeep and Ram.

That's not enough, though. DADA representatives, who travel the globe tirelessly drumming up vehicle intros and executives for the show, need to get back on the road and make Detroit THE stage for the next generation of global brands.

Make this launching pad for China's competitors for the Accord and Google's self-driving minivan, India's answers to the Jeep Wrangler and Honda Civic.

History shows that if DADA makes Detroit the place strong newcomers announce themselves, established brands will come here, too.

Maybe that will even bring back the Germans.

Reverse: Federal Highway Act

Neutral: How Does Harley Win Here?

Can the Motor Company endure this trade war, or is it impossibly caught between a rock and a hard place?

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