Economy

Harley-Davidson to make motorcycles in Europe to avoid trade-war tariffs

Harley-Davidson to make motorcycles in Europe to avoid trade-war tariffs

Harley announced Monday that due to the European Union's new tariffs on USA motorcycles - which came in retaliation for Trump's steel and aluminum tariffs - the company was shifting some production to non-US plants.

The company said the EU's tariff increase - to 31%, from the current 6% - would increase the cost of every motorcycle shipped from the United States to Europe by $2,200.

The total financial hit to the company will be in the range of $90 to $100 million per year, but the company said it would not pass those costs onto consumers in the form of higher prices.

In the meantime, it's planning to increase production in worldwide plants over the next 18 months. While Harley said it's committed to making motorcycles in the USA, it suggested it had no other choice but to move production from its home market.

According to the company, the EU's new tariffs will increase the cost of a motorcycle shipped from the USA to Europe by $2,200.

The American company Harley-Davidson will move the production of some motorcycles out of the United States to avoid rising costs from tariffs.

The EU implemented tariffs on just over $3 billion worth of U.S. goods in response to Trump's decision to hit steel and aluminum imports with tariffs.

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Citing the high costs of new European tariffs, Harley Davidson announced Monday it would move some of its United States motorcycle production overseas. In response, Canada and Mexico enacted tariffs of their own, and last week, the European Union levied tariffs on some US goods, specifically targeting iconic American brands like Harley-Davidson and Kentucky bourbon.

"Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag", Trump wrote on Twitter.

Harley-Davidson Inc.'s headquarters in Milwaukee. Gov. Scott Walker of Wisconsin, where Harley-Davidson is headquartered, says the goal should be no tariffs for anyone. Harley will soon begin shifting production for its Europe-bound motorcycles to the continent itself, a process that may take over a year.

Harley-Davidson will provide more details of the financial implications and plans to mitigate the impact of retaliatory European Union tariffs during the company's second quarter earnings conference call on July 24, 2018, at 8:00AM CDT. 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.

Trump has argued that the U.S.is being taken advantage of, but some business leaders argue that Nafta facilitated the exact kind of trade that benefits USA companies. It also has manufacturing operations in Australia, Brazil, India and Thailand. Setting up production facilities overseas will take between nine and 18 months, the company said. USA motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession. The EU's trade chief said last week that it was "left with no other choice" after Mr. Trump imposed tariffs of 25 percent on steel imports and 10 percent on imported aluminum from the EU on June 1.

"Harley-Davidson's announcement today is the latest slap in the face to the loyal, highly-skilled workforce that made Harley an iconic American brand".

He says the ultimate goal should be no tariffs.