Harley-Davidson moves some production out of USA after tariffs

Virginia Carson
June 26, 2018

Earlier this year the White House imposed a 25% tariff on steel and a 10% tariff on aluminium imports from several countries, including the 27-member EU.

The International Association of Machinists and Aerospace Workers, which represents workers at the company's facilities in Wisconsin, Missouri and Pennsylvania, expressed septicism that the production shift was needed.

That was in response to Washington's tariffs on European steel and aluminum, which President Trump said was created to protect U.S.jobs.

The Wall Street Journal reported that the Trump administration plans to impose curbs on Chinese investment in US technology companies and high-tech exports to China.

But Mr. Trump says Harley is using the tariff tiff as an excuse.

That will make each bike about $2,200 more expensive to export, Harley said.

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The trade wars started by US President Donald Trump have caused headaches for Harley-Davidson, which is moving production of its EU-bound motorcycles out of the US to avoid European counter-tariffs that it says will cost the company US$90 million to US$100 million a year.

The Wisconsin-based motorcycle giant said increasing production outside the USA was "not the company's preference" but represented "the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe".

The company said it would not raise retail or wholesale prices for its dealers, and expects the tariffs to result in incremental costs of $30 million to $45 million for the rest of 2018 and $80 million to $100 million on a full-year basis.

Of course, Harley-Davidson has the ability to relocate some of it's manufacturing overseas because it's a global brand that sold more than 40,000 motorcycles to European consumers previous year.

A USA motorcycle sales slump has deepened since then, spurring Harley's decision in January to close a plant in Kansas City, Missouri, eliminating about 260 jobs.

"Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag", Trump said. "Shows how unbalanced & unfair trade is, but we will fix it".

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More potential pitfalls for Harley-Davidson and other US manufacturers could be on the way.

But the company said it expected increasing production in its worldwide plants would require additional investment and could take as long as 18 months. He's said the tariffs he's applying will realign trade imbalances that harm U.S. workers.

"We are now assessing the potential impact on our USA facilities", Harley-Davidson spokesperson Michael Pflughoeft told Bloomberg.

Shares in Harley-Davidson were down by 4.1 percent to $42.38 (£31.92) shortly after the market opened.

"We want Harleys made here, more made here, and that's going to happen under the president's trade policies". Daimler produces vehicles in the U.S.

Harley-Davidson did not immediately return a request for comment. To avoid this cost, the country will shift to countries where there are lower or no tariffs.

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But that status made the company a target for European Union retaliation along with bourbon and blue jeans.

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