Published: Tue, June 26, 2018
Business | By Pearl Harrison

Harley-Davidson moves some production from U.S. due to tariffs

Harley-Davidson moves some production from U.S. due to tariffs

Harley-Davidson said Monday it will move production of its motorcycles headed for European Union customers outside the United States to avoid a new tariff.

The Trump administration imposed tariffs on imports of European steel and aluminum earlier this month, and in response, the European Union began charging import duties of 25 per cent on a range of USA products including big motorcycles like Harley's on June 22.

The company added, "Increasing global production to alleviate the European Union tariff burden is not the company's preference, but represents the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe".

Europe is Harley's second biggest market outside the USA and sold nearly 40-thousand motorcycles in the Europe a year ago.

American motorcycle company Harley-Davidson announced it would move some of its production outside of the United States in response to the trade spat between the European Union and President Donald Trump.

The company said earlier in the day that it stands to lose as much as $100 million a year if it does not shift more of its manufacturing overseas. But since then the company has been counting the costs of his trade policies.

President Donald Trump late on Monday went after iconic American motorcycle company Harley-Davidson after the company announced it was moving some production out of the US.

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


Republicans also used the Harley announcement to take a shot at Trump's recent trade attacks on the EU, Canada, and Mexico. Harley tied its higher costs to a sequence started by Trump, who praised the company as a model American manufacturer during a February 2017 meeting at the White House.

"Early this year Harley-Davidson said they would move much of their plant operations in Kansas City to Thailand". A year after Trump pulled the United States out of the TPP in January 2017, Harley announced it would close its factory in Kansas City and consolidate production in York, Pennsylvania, eliminating about 260 jobs.

Motorcycles were hit with a whopping 31 percent tariff, a penalty that amounted a 25 percent increase in costs. Daimler produces vehicles in the U.S. Harley-Davidson shares sank more than 5 per cent in morning trading on Monday, its worst day in months.

The company said that it will not raise its prices because that would cause an immediate and long-lasting effect on sales in Europe.

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

But just over a year later, Harley serves as a sobering example of what happens when Trump's America First trade policy collides with the rest of the world. In the U.S., Harley-Davidson sold 147,972 motorcycles previous year, according to company data.

House Speaker Paul Ryan's spokeswoman says that Harley's decision shows how harmful tariffs can be and the best way to help American workers and consumers is to open new markets. But he says the ultimate goal is the removal of all tariffs so "we don't have this tit for tat on any number of products out there".

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