A Harley-Davidson Inc. badge sits on a motorcycle fuel tank outside the company’s store in Paris on June 28. (Christophe Morin/Bloomberg)

A Harley-Davidson Inc. badge sits on a motorcycle fuel tank outside the company’s store in Paris on June 28. (Christophe Morin/Bloomberg)

Trump says ‘tariffs are the greatest!’

Harley-Davidson reported stronger-than-expected earnings in its second quarter.

By Rachel Siegel / The Washington Post

WASHINGTON — President Donald Trump praised tariffs in a tweet Tuesday morning, saying “tariffs are the greatest!” and countries that treat the United States unfairly on trade must either negotiate fair deals or get “hit with tariffs.”

“It’s as simple as that — and everybody’s talking!” Trump wrote. “Remember, we are the ‘piggy bank’ that’s being robbed. All will be great!”

The tweet came the same day that American motorcycle icon Harley-Davidson reported stronger-than-expected earnings in its second quarter, offering a look at how the company could fare in the midst of an international trade war.

Harley-Davidson, which plans to ship 231,000 to 236,000 motorcycles this year, said it expects the tariffs to cut into its margins. It expects its operating margin as a percent of revenue to come in at 9 to 10 percent because of the impact of the tariffs, down slightly from last year.

The company posted a second-quarter profit of $242.4 million, down 6 percent from a year ago. Earnings for the quarter came in at $1.45 per share, beating some projections but down from the $1.48 reported at the same time last year.

Harley-Davidson CEO Matt Levatich said the company’s performance in the quarter was in line with expectations.

“Our manufacturing optimization, demand-driving investments and commitment to manage supply in line with demand remain on target and continue to strengthen our business,” Levatich said.

Harley-Davidson said in June that the EU tariffs will add $2,200 to the cost of its average motorcycle, posing “an immediate and lasting detrimental impact to its business.” In the second quarter, its U.S. retail sales dropped more than 6 percent. International sales climbed slightly.

Trump put the spotlight on the Milwaukee-based motorcycle maker last year when he praised it for “building things in America.” Trump brought Harley-Davidson executives and workers to the White House in February 2017 and championed their growth.

“I think you’re going to even expand,” he said at the time.

Earlier this year, citing the burden of Trump’s “America First” trade measures, Harley-Davidson announced plans to move some of its production overseas to avoid repercussions of a trade war. The company that prides itself in its made in the USA brand has plants in operation in Australia, Brazil and India. Last month, Trump threatened heavy taxes on Harley-Davidson and said that if the company moved overseas, “it will be the beginning of the end.”

Harley-Davidson had long-established plans to open a new plant in Thailand. But the company has also said it would move operations out of the country to soften the impact of tariffs imposed by Europe. Those tariffs on U.S. products were put in place as the European Union responded to Trump’s tariffs on steel and aluminum imports from Europe.

The company has said the tariffs will add $30 million to $45 million to its expenses for the rest of the year, costs which Harley-Davidson has said it will absorb as it plans to move operations overseas. New tariffs on steel and aluminum account for much of that added cost. For the entire year, the hit from tariffs could reach $100 million, it said.

Europe makes up Harley-Davidson’s second-largest market after the United States, with nearly 40,000 units sold last year. The 115-year-old company has said that moving operations overseas will require additional investment outside the United States and could take nine to 18 months.

On a Tuesday earnings call, company executives said the Thailand plant is expected to open later this year and will help provide lower prices to dealers and consumers that aren’t “burdened with excessive tariffs.”

Company executives on the call said they were in a “constant dialogue” with the Trump administration and foreign governments about the tariffs, and that it was working with all parties “to do the best we can to get these tariffs removed.”

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