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Trump talks up love for Harley-Davidson, but he killed the deal that could have fixed its problems

Ylan Mui

President Donald Trump tried to turn Harley Davidson (NYSE: HOG) into the poster child for America's bad trade deals. But it was Trump who scrapped the deal that Harley itself said could have fixed its problems.

In his address to Congress, Trump said Tuesday the Milwaukee-based company expressed concern that its motorcycles — famously made in the U.S.A. — faced punitive tariffs as high as 100 percent in overseas markets. The company sells more than a third of its hogs outside the United States. International growth was up 2.9 percent last fiscal year, according to company documents, while the number of motorcycles sold domestically dropped nearly 4 percent.

"They told me — without even complaining, because they have been mistreated for so long that they have become used to it — that it is very hard to do business with other countries because they tax our goods at such a high rate," Trump said in his speech.

That's one reason Harley chief executive Matt Levatich publicly supported the Trans-Pacific Partnership , a sweeping 12-nation free trade agreement that was to be former President Barack Obama's signature initiative in Asia. Vietnam , to cite one country that was to be part of the trading bloc, imposes some of the highest tariffs in the continent on U.S. automotives: Motorcycles alone get hit with a 74 percent tax. TPP would have eliminated it.

But the deal turned politically toxic during a presidential election that was defined by frustration among blue-collar workers left behind by decades of globalization. Both Trump and Democratic presidential nominee Hillary Clinton vowed to pull out of the agreement, and it lacked political support in Congress.

On Tuesday, Trump took credit for putting the final nail in the would-be trading bloc's coffin. Among his first executive actions was to formally end the United States's participation in the deal.

" We have withdrawn the United States from the job-killing Trans-Pacific Partnership," he said.

Rohit Kumar, co-leader of PriceWaterhouseCooper's tax policy service, said Trump's discussion of Harley's international treatment raised the question of whether the administration hopes to negotiate to reduce tariffs overseas — or slap them on the goods other countries import into America .

"The clear implication of that is maybe we should be applying tariffs on their products," Kumar said.

Trump met with Harley's executives earlier this month, with motorcycles parked on the White House lawn. In an interview with The Street, Levatich praised Trump's commitment to U.S. manufacturing and said he hoped the administration would seek new deals with individual countries.

"TPP was important to us, but now of course we are turning our attention to whatever bilateral trade agreements that could help level the playing field for Harley-Davidson," he said in that interview.



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