Friday, 20 July, 2018

Trump 'surprised' by Harley-Davidson move to shift work

Harley-Davidson Will Shift Manufacturing Overseas To Avoid Tariffs Harley-Davidson moving some production overseas after retaliatory tariffs
Kenneth Drake | 26 June, 2018, 15:33

European Union tariffs will add $2,200 to the cost of an average motorcycle, Harley-Davidson said in a Securities and Exchange Commission filing.

Harley-Davidson Inc. sold nearly 40,000 motorcycles in the European Union a year ago, its second-largest market after the United States, according to the company. The company operates manufacturing facilities in Brazil, India and Australia, and is beginning production in Thailand this year.

The shares dropped 2.7 percent to $43 in early U.S. trading.

Most young people are too buried in student loans or the gig economy to shell out more than $20,000 for a part-time ride, so to prop up flagging popularity here at home, Harley-Davidson began trying to improve foreign sales.

Either way, Harley-Davidson's announcement drew criticism from the White House. But since then the company has been counting the costs of his trade policies. All three say they will be forced to close their plants unless they can get relief from the Trump administration's steel tariffs.

The decision by the motorcycle behemoth is the most high profile to date as the trade dispute between the USA and the European Union heightens. That will add an estimated $30 million to $45 million in costs for the remainder of 2018 and $90 million to $100 million annually.

Harley-Davidson's move is already drawing the ire of tariff critics, including members of the president's own party.

"Therefore, Harley-Davidson will not raise its manufacturer's suggested retail prices or wholesale prices to its dealers to cover the costs of the retaliatory tariffs".

"Thank you, Harley-Davidson, for building things in America", Trump said at the time. As a result, Harley-Davidson said there will be an incremental cost of approximately $2,200 per average motorcycle exported from the U.S.to the EU.


Harley-Davidson's move is some of the most direct evidence yet that tit-for-tat trade fights between the United States and other countries have consequences for American companies.

On Monday, Mid-Continent Nail, the largest nail manufacturer in the United States, laid off 60 workers at a Missouri factory in what the Washington Post said were the first casualties of the trade war that Trump is waging against trading partners.

Harley-Davidson is an American company originally founded in Milwaukee, Wisconsin, by two friends working out of a backyard.

Harley-Davidson did not immediately return a request for comment.

Harley-Davidson said that shifting targeted production from the United States to global facilities could take up to 18 months to be completed.

Europe represents Harley's No. 2 market, after the United States, with sales previous year approaching 40,000 units.

In the wake of the sluggish U.S. sales, Harley-Davidson announced in January it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania. It's unclear at this stage where production outside of the U.S. will be carried out.

Earlier this year, Trump imposed unilateral tariffs on steel and aluminum imports.

Retaliation by Brussels targeted producers in Republican states where Trump draws much of his support - including bourbon whiskey, Levi's jeans - and is expected to raise the prices of USA goods worth up to €2.8bn (£2.5bn).

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