Harley-Davidson moves some work from USA due to tariffs

Harley-Davidson moves some work from USA due to tariffs

Harley-Davidson moves some work from USA due to tariffs

Production of Harley-Davidson motorcycles sold in Europe will move from US factories to facilities overseas, the Milwaukee-based company announced Monday, a effect of the retaliatory tariffs the European Union is imposing on American exports in an escalating trade war with the Trump administration.

"Europe is a critical market for Harley-Davidson". The EU tariffs on $3.4 billion worth of USA products are retaliation for duties the Trump administration is imposing on European steel and aluminum.

The company said in a regulatory filing Monday that European Union tariffs on its motorcycles exported from the USA jumped between 6 per cent and 31 per cent, adding about $2,200 per average motorcycle exported from the U.S.to the EU. It anticipates the cost for the rest of the year to be approximately $30 million to $45 million.

Harley-Davidson said the tariffs make shifting production "the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe". Analysts project the company will earn about US$591 million this year on US$5 billion of revenue.

Harley-Davidson has been relying on Europe and other global markets to help offset declining sales in the USA, where the baby boomers who have long bought the vehicles are aging and younger consumers are not taking to the motorcycles in a big way.

Adding to the difficulty facing the company were steel and aluminum tariffs on the EU, Canada and Mexico finalized by the Trump administration at the start of June.

"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.

A Harley-Davidson spokesman said the company had nothing to say in response to Trump's tweet beyond its filing with the U.S. Securities and Exchange Commission.

The company did not specify where the additional manufacturing would go.

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

Harley-Davidson executives said the company would not raise prices on their motorcycles, but rather they will absorb the cost and are expected to lose up to $100 million. The EU sales make up nearly 16.4 per cent of Harley-Davidson's worldwide sales.

The company is already struggling with falling sales.

The announcement, made in a public filing, is an early sign of the financial cost to companies on both sides of the Atlantic as the United States and Europe impose tariffs and counter-tariffs on each other.

In January, Harley-Davidson announced that it would be closing its plant in Kansas City and moving leftover production to York, Pennsylvania.

The Harley move represented a slap in the face for Trump.

Asked about the Harley decision, Wisconsin Governor Scott Walker addressed the issue of tariffs in general but not specifically the situation faced by the company.

Harley-Davidson's move is one of the most visible consequences of the trade disputes triggered by President Trump's decision to levy tariffs on steel and aluminium imports. The company operates manufacturing facilities in Brazil, India and Australia, and is beginning production in Thailand this year.

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