Treasury Secretary Steven Mnuchin cast doubt Thursday over Harley-Davidson's claim that new tariffs are forcing the company to shift jobs overseas.
"My sense is that Harley-Davidson has previously planned on moving some of this manufacturing and it’s not just a result," Mnuchin said, speaking at a Congressional testimony.
The motorcycle manufacturer said in a regulatory filing June 25 that President Donald Trump's administration placing tariffs on European steel and aluminium would "significantly" hurt motorcycle sales, raising the cost of each bike by an average of $2,200. Harley-Davidson said it would be moving production of motorcycles shipped to the European Union, instead of increasing the price of the motorcycles for its dealers in order to cover the costs of the tariffs. The company's release said 19 percent of its sales were to Europe in the first fiscal quarter of 2018.
"Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region," the company said at the time.
Mnuchin said that he has "not spoken to the Harley-Davidson people direct" but noted that the President has. Trump initially said in a tweet that he was "surprised," before later going on the offensive, blasting Harley-Davidson and saying that his administration is now "working with other" motorcycle companies.
Pressed by Congressional representatives about the broader scope of Trump's escalating trade war with China, Europe, Canada and Mexico, Mnuchin said he could "assure" them that he is "monitoring" the situation.
"We have not yet seen any negative impact," Mnuchin said. “We are monitoring the impact on the economy of all these different issues.”
Mnuchin also addressed the possibility of a global economic recession and the rise in yields, as the so-called yield curve between two-year Treasury note yields and 10-year note yields moves closer and closer to zero.
"We don’t have an inverted yield curve. There’s a flattening of the yield curve that somewhat reflects people’s future view of rates and where rates will be. I don’t think that’s indicative in any way of recession concerns," Mnuchin.
The declining yield curve means there is less payoff for investors willing to hold debt for a longer period of time. At the latest reading, the spread between the yield on the 10-year note and the two-year note was 26.19 basis points, down from above 90 basis points early in the year.