Harley-Davidson to take big hit from European Union tariffs

Harley-Davidson to shift some production out of US over EU tariffs

Harley-Davidson to shift some production out of US over EU tariffs

Harley-Davidson will begin to shift the production of motorcycles headed for Europe from the United States to factories overseas as it faces spiralling costs from tariffs.

"Motorcycles" don't even merit a mention in the Indian Ministry of Commerce and Industry's data on exports to the United States, as The Post's Annie Gowen wrote in February, so the tariffs Trump has threatened to impose would essentially have nearly zero impact.

"A company that is as connected to America, and Americana, as Harley is probably going to be laying off USA workers in favor of foreign workers and going to be losing money as a result of this", said James Hardiman, an equity research analyst with Wedbush Securities. Harley-Davidson maintains a strong commitment to USA -based manufacturing which is valued by riders globally.

Walker says increasing foreign investment will help with the trade imbalance and therefore lead to a reduction in tariffs.

Harley-Davidson Inc. announced it is shifting production of some of its motorcycles to Europe because of President Donald Trump's escalating trade war, which critics warn could hamstring the humming us economy and cost jobs.

Harley-Davidson said it expected the ramp-up in production to take nine to 18 months.

In response to the United States tariffs, the European Union began charging import duties of 25 per cent on a range of American products, including big motorcycles like Harley-Davidson's, on June 22.

They have drawn retaliation from the EU, Canada, Mexico, India and others while driving up the cost of metals for manufacturers in the US.

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

However, the tariffs have also helped to spur investment in United States steel plants. However, earlier plans will continue to shutter a plant in Missouri and bring the facilities there to another existing plant in Pennsylvania.

The famed motorcycle maker said in a regulatory filing Monday that European Union tariffs on its motorcycles exported from the USA jumped from 6 percent to 31 percent. Rather than pass on those costs to consumers in higher prices, Harley said it would absorb them for now while it begins planning to move production offshore.

Harley-Davidson said it would raise investment in its worldwide plants, though it did not say which ones, adding that it expected the increase in production to take nine to 18 months.

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.

Media captionHow hogs and Harleys became weapons in a looming trade war.

But Trump may be mistaken about the company's Thailand plant. Even before the EU's announcement, Harley made the decision to close its plant in Kansas City and has manufacturing facilities in India and Brazil.

Donald Trump has slammed Harley-Davidson after it elected to move some of its production overseas.

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A spokeswoman for House Speaker Paul Ryan, of Wisconsin, says Harley's decision is "further proof of the harm from unilateral tariffs".

Europe represents Harley's No. 2 market, after the United States, with sales a year ago approaching 40,000 units.

Harley shares closed down almost 6 per cent and analysts cut their profit forecasts on concerns about how quickly the company would be able to adapt to the 25 per cent import duties the European Union began charging on June 22.

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

Struggling to overcome a slump in United States demand, Harley has been aiming to boost sales of its iconic motorcycles overseas to 50% of total annual volume from about 43% now. "We didn't see this coming".

Trump has made a manufacturing revival central to his economic message, hoping to retain his political base of white blue-collar workers.

European and USA stock markets all plummeted on Monday amid fears the world was heading towards an all-out trade war.

China is due to retaliate in kind.

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