European Union import tariffs force Harley to rethink
European Union import tariffs force Harley to rethink
US trade policy drives Harley Davidson to create EU jobs
26 June, 2018, 13:47
U.S. President Donald Trump on Monday slammed Harley-Davidson Inc (HOG.N) after the motorcycle maker said it would move production for European customers overseas to avoid retaliatory tariffs that could cost it up to $100 million per year. "Europe is a critical market for Harley-Davidson", the company said.
European sales of Harley-Davidson motorcycles, the company pointed out, amounted to almost 40,000 bikes in 2017. The company maintains facilities in Brazil, India and Thailand where it completes assembly of motorcycles for sales in those and other markets.
Harley-Davidson, the dominant player in the heavyweight USA motorcycle market said earlier on Monday it would not pass on any retail or wholesale price increases in the European Union and instead focus on shifting some US production.
Harley-Davidson plans to move some of its motorcycle production outside the USA in response to retaliatory tariffs that include its products, Bloomberg reports.
The move is among the first signs that Trump's use of tariffs, which he has promoted as a way to boost employment in the steel and aluminum industries, is hurting other American businesses. The company reported $521.8 million in earnings in 2017 on $5.6 billion in revenue.
Economists said Harley's decision to shift production outside of the U.S. is an expected result of Trump's increased trade restrictions and likely is a sign of things to come.
The tariffs, which took effect Friday, are retaliation for taxes President Donald Trump imposed on European Union shipments of steel and aluminum.
President Donald Trump after greeting Harley-Davidson executives on the South Lawn of the White House, February 2, 2017.
Last week, German automaker Daimler AG cut its 2018 earnings outlook, a change that it says is partly due to increased import tariffs for USA vehicles in China. These are not, however, the only layoffs associated with Donald Trump's European Union tariff negotiation strategy.
The EU tariffs on 3.4 billion dollars (£2.5 billion) of United States products are in retaliation over duties the Trump administration is imposing on European steel and aluminium.
That will make each bike about $2,200 more expensive to export, Harley-Davidson said.
Harley-Davidson's move is already drawing the ire of tariff critics, including members of the president's own party. The European Union responded by placing tariffs on bourbon whiskey, jeans, and motorcycles, as Trump's approach to trade negotiations quickly turned into what many fear is becoming an global trade war.
"If we can put the pressure on realize the interest of the United States is not to put more tariffs on but rather to create a level playing field where there are no tariffs in the future that really whether it's Harley Davidson - whether it's an agriculture entity whether it's another manufacturer, that's really got to be our end game", said Governor Walker. AshLee Strong says the best way to help American workers, consumers and manufacturers is to open new markets and not raise barriers.
White House press secretary Sarah Huckabee Sanders downplayed the announcement earlier Monday, saying Trump's "trade and economic policies have been a huge benefit to the American economy".
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