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Harley-Davidson is Moving Jobs Offshore Despite Tax Cuts and Subsidies

By   Follow Me on Twitter     Message Joel Joseph       (Page 1 of 1 pages)     Permalink    (# of views)   1 comment

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President Trump proclaimed that massive corporate tax cuts would keep jobs here in the USA. Harley-Davidson, the iconic U.S. motorcycle manufacturer, is using $700 million of its tax-cut money to buy back its own shares while closing its Kansas City plant and moving production offshore to Thailand. Trickle-down economics has played another trick on American workers.

Payback

Documents released recently by the Federal Reserve Board disclosed that the Fed lent Harley-Davidson $2.3 billion in 2008 and 2009 during the depths of the Great Recession. These documents show that the Federal Reserve purchased commercial paper from with its Commercial Paper Funding Facility (CPFF) on 33 separate occasions from Harley. In other words, the Federal Government saved Harley-Davidson once again.

Thirty-five years ago, President Ronald Reagan and Congress saved Harley by imposing massive import tariffs on Japanese motorcycles. By giving the sole American motorcycle maker some breathing room from competition to retool, Harley was able to get its act together and turn profitable.

Yet, despite being wwice bailed out by the Feds and given a billion-dollar tax bonus, Harley-Davidson turns around and closes a plant in Kansas City while opening one in Thailand.

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Thai Hogs

Harley motorcycles are affectionately known as Hogs. In fact, Harley's stock symbol on the New York Stock Exchange is HOG. Harley is building a brand-new plant in Thailand with some of the windfall that it got from President Trump's corporate tax break. This new motorcycle assembly plant in Thailand's Rayong province, southeast of Bangkok, is scheduled to open later this year.

At the same time Harley is slashing 800 jobs and closing its Kansas City plant next year. Harley-Davidson said that it is opening a factory in Thailand to avoid that country's 60% tariff on U.S. motorcycles. President Trump should have jumped on this and negotiated with Thailand to reduce its tariff to the U.S. level of 2.4%. (Harley also built a factory in India in 2011 because India levies a 100% tax on imported motorcycles.)

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Harley is Not the Only Ungrateful Hog

The U.S. government not only bailed out Harley twice, it bailed out General Motors and Chrysler Corporation.The GM bailout cost U.S. taxpayers $10 billion that it has never repaid, and never will. The 2008 American auto-industry bailout was intended to save American manufacturing jobs, not create jobs overseas. After the bailout GM has been importing Buicks from China, South Korea and Poland. China charges a 25% tariff on U.S. cars, while we only charge a 2.5% duty on cars imported from China.

Chrysler, now owned by Fiat-Chrysler, was also bailed out in 2008. After the bailout, Chrysler, for the first time in history, imported Jeeps. Prior to 2016, all Jeeps were made in Toledo, Ohio. Fiat is now manufacturing the Jeep Renegade in Melfi, Italy. The European Union, which includes Italy, charges U.S. car importers a ten-percent duty, while we charge EU car imports only a 2.5% tariff.

Congress Must Act

The U.S. Constitution provides that Congress has the power to enact duties. Article I, Section 8, Clause 1. Congress has the power to enact reciprocal tariffs, so that our import taxes automatically go to the level charged by a foreign country. I have proposed the Chinese American Reciprocal Trade Act (CARTA) which would do just that. We can go further and enact a world-wide reciprocal-trade act.

Free trade does not mean that we have to have the lowest tariffs in the world and every other country can charge high duties on American products. China is now a developed country and must deal with the United States on an equal footing. European countries are wealthy, many wealthier than the United States, and should allow American products in without high tariffs. Why should Tesla pay a ten-percent duty in Europe when Mercedes pays only a 2.5% import tax in the United States? Even with these high duties Tesla has become a best-seller in Germany and Norway. Tesla would export even more high-tech electric, American-made cars if other countries treated the United States as an equal trading partner.

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