Donald Trump warns he will tax Harley-Davidson 'like never before' in relocation response

US President Donald Trump. Photo / AP

President Donald Trump has warned he will tax Harley-Davidson "like never before" if it goes ahead with plans to move production outside the US, saying the company's motorcycles "should never be built in another country".

Harley-Davidson had on Monday announced it would be moving its production of motorcycles for EU destinations from the US to its international plants, which are located in Thailand, Brazil, India and Australia, citing the escalating trade war between the US and EU.

Last week, EU tariffs were imposed on US$3.3 billion ($4.8b) in US imports, including motorcycles, in response to US duties on steel and aluminium imports from the EU – a move Harley-Davidson said would increase the cost of its bikes for European customers by around US$2,200 each, reports the Daily Telegraph.

Harley-Davidson had said it was seeking to "address the substantial cost of this tariff burden long-term", and expected to ramp up production in international plants within the next nine to 18 months.

However, Trump branded the company's move a "white flag" and an "excuse", and said he had "fought hard for them".

He said he had met with executives from the company earlier this year and they had said then that they would be moving a substantial part of their operations to Thailand.

"That was long before Tariffs were announced. Hence, they were just using Tariffs/Trade War as an excuse. Shows how unbalanced & unfair trade is, but we will fix it," he wrote on Twitter.

Donald Trump has warned he will tax Harley-Davidson "like never before" if it goes ahead with plans to move production outside the US. Photo / Getty Images

"If they move, watch, it will be the beginning of the end – they surrendered, they quit!" he said.

His comments come amid mounting tensions between the two trade blocs, as rhetoric ramps up on both sides of the Atlantic.

Trump last week threatened he would introduce new 20 per cent tariffs on imports of EU cars, and on Tuesday said the US was close to finishing its report into "tariffs on cars from the EU in that they have long taken advantage of the US in the form of trade barriers and tariffs".

"In the end it will all even out – and it won't take very long!" he said.

EU officials over the weekend said, should these additional tariffs be imposed, it will take further retaliatory measures against the US.

Currently the US taxes imports of EU passenger cars at a rate of 2.5 per cent, and of 25 per cent for imported pickup trucks, while the EU imposes tariffs of 10 per cent on US imported cars.

The ongoing tit-for-tat tariffs have led to warnings from international bodies, including the International Monetary Fund and credit ratings agency Moody's, over how they are putting global economic growth at risk.

Chancellor Philip Hammond echoed those comments on Tuesday, when speaking to CNBC, cautioning that a full-blown trade war would be a "disaster for everyone, not least for the United States".

Speaking to CNBC, he said: "What I can say is this: whatever happens the UK will remain an outspoken proponent of open markets and free trade, low tariff barriers and low non-tariff barriers."