Harley-Davidson moves motorcycle production away from U.S. to avoid European Union tariffs

26 June, 2018, 16:14 | Author: Teresa Adams
  • Harley-Davidson to take big hit from EU tariffs

Shares at Harley Davidson are down 2.40% in early morning trading.

Already, Harley had announced plans to close a factory in Missouri and build one in Thailand, after Trump pulled the United States out of the Trans-Pacific Partnership, the free-trade agreement with a bloc of Asian countries including New Zealand that would have lowered barriers to key markets.

Harley-Davidson Inc said on Monday it would not raise retail or wholesale prices for its dealers to cover the costs of the retaliatory tariffs by the European Union on U.S. products.

In a regulatory filing, the Milwaukee, Wisconsin-based company said the retaliatory duties would result in an incremental cost of about $2,200 per average motorcycle exported from the United States to the European Union, but did not provide more details on current motorcycle costs.

"Good luck to Republicans running on the Trump tariffs in November", the editorial board wrote in a new op-ed.

A motorcycle is seen at the Harley-Davidson Museum in Milwaukee on August 31, 2013.

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"I fought hard for them and ultimately they will not pay tariffs selling into the European Union, which has hurt us badly on trade, down US$151 Billion".

The EU's levies are only the latest blowback Harley has faced from Trump's trade policies.

While Trump has repeatedly claimed that the USA can win trade wars, victims are starting to pile up at home and overseas. But in the short term, further escalation of the trade dispute seems likely. His next move may be to impose steep tariffs on German cars, which would constitute a serious escalation in an economic battle that is translating to real-world losses. In a piece by the Washington Post, the Mid-Continental nail, one of the country's largest manufacturers of nails, say they will be laying off approximately 60 employees as a direct result of the European Union tariffs set forth by the Trump administration. This is of particular importance to motorcycle lovers, since Harley-Davidson made a decision to move some of its production overseas to avoid the new tariffs.

"We are now assessing the potential impact on our U.S. facilities", Michael Pflughoeft, a company spokesman, said in an email.

President Trump will reportedly announce a new set of restrictions on trade with China this week. However, on May 31 the White House announced that those exemptions would be ending at the end of the day. The pending announcement "does not include any other countries" except China.

Harley-Davidson representatives did not immediately return a request for comment. It did not say how jobs in the United States would be affected.

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The firm said that if it stayed in the US then it would result in an incremental cost of about 2,200 dollars per motorcycle sold in Europe. It has three assembly plants outside the United States, one each in Brazil, India and Thailand.

"In the near-term, the company will bear the significant impact resulting from these tariffs, and it estimates the incremental cost for the remainder of 2018 to be approximately $30 to $45m", it continued.

Harley-Davidson said that shifting targeted production from the USA to global facilities could take at least nine to 18 months to be completed.

It is worth mentioning that Harley could make the decision to shift production because it had chosen, in 2017, to open a new manufacturing plant in Thailand. Shifting production to its non-U.

Harley Davison will shift production to worldwide facilities, saying the move will take nine to eighteen months.

Analysts have noted the irony of Harley-Davidson's plight given that its executives were among the first to visit the White House in February 2017 shortly after Trump took office. "Thank you, Harley-Davidson, for building things in America", the president said then.

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