Harley Davidson to shift production over European Union tariffs

Jermaine Castillo
June 26, 2018

Harley-Davidson say the tariffs will result in approximately $2200 (£1650) being added to the export cost of each motorcycle.

Milwaukee-based Harley-Davidson Inc. will shift production of motorcycles for Europe to its global facilities to avoid up to $100 million annually in costs from tariffs applied by the European Union.

A business like Harley-Davidson gets hit at both ends, as American tariffs on steel and aluminum imports drive up the cost of raw materials used to build motorcycles and retaliatory European Union tariffs make it more hard to sell their products.

The announcement comes as the 117-year old company is also buffeted by higher steel costs following tariffs enacted by US President Donald Trump, who had embraced the company as an emblematic US industrial firm in the early days of his administration.

"On a full-year basis, the company estimates the aggregate annual impact due to the European Union tariffs to be approximately $90 to $100m".

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United Steelworkers, a labor union representing some of the motorcycle maker's USA employees, said Monday that Harley-Davidson had long since begun to shift its manufacturing operations overseas. Europe is a critical market for Harley-Davidson.

It believes that cost to be about $2,200 per bike it exports from the USA to the EU.

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

Europe is H-D's second-biggest market (guess the first), having sold 40,000 bikes there in 2017.

"Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region", the company said. Case in point, Harley Davidson.

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

Trump on Friday further threatened to escalate a trade war with Europe by imposing a 20 percent tariff on all USA imports of EU-assembled cars.

Sen. Jeff Flake (R-Ariz.), for example, warned over the weekend that he's prepared to oppose Trump's judicial nominees unless the Senate votes on legislation curtailing the president's power to unilaterally impose tariffs on other countries.

"So thank you, Harley-Davidson, for building things in America", Trump said at the time. It makes most of its motorcycles in the United States and has plants in Wisconsin, Pennsylvania, and Missouri. The company maintains facilities in Brazil, India and Thailand where it completes assembly of motorcycles for sales in those and other markets.

Trump praised Harley-Davidson as an "American icon, one of the greats" and expressed confidence the company would expand United States manufacturing under his administration.

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