Wednesday, 21 November, 2018

Harley-Davidson Will Shift Manufacturing Overseas To Avoid Tariffs

Logo of U.S. motorcycle company Harley Davidson Harley-Davidson to shift some production out of US over EU tariffs
Scott Davis | 26 June, 2018, 16:13

That news followed Harley-Davidson's announcement that it would move production of its Europe-bound vehicles offshore in response to a 31% tariff that the European Union imposed, which was itself retaliation against Trump's tariffs on European steel. The company already has plants in Australia, Brazil and India, and it will soon open another facility in Thailand. Trump has already shown he is sensitive to tariffs aimed at American farmers, almost reaching a trade deal with Beijing that would have boosted Chinese imports of US agricultural goods, instead of putting billions of dollars in sales at risk.

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.

USA companies that range from boat-builders to nail manufacturers have warned about the consequences of escalating trade tensions.

American President Donald Trump had frequently embraced the firm as an emblematic United States industrial company, but Harley-Davidson's decision to move some work overseas to avoid retaliatory European Union duties left him disappointed.

Mr Trump was particularly heartbroken over Harley-Davidson because he held it up as an example of a firm he could help by bringing down trade barriers. Trump's tariffs also raise costs on imported parts they need to manufacture in the United States. For that reason, Harley said it would absorb the additional costs.

The response came to President Trump's recent decision to slap tariffs on European imports.

The EU imposed retaliatory tariffs last week on $3.4 billion worth of USA products like bourbon, motorcycles and orange juice.The new duties are in direct response to President Trump's decision to increase fees on aluminium and steel coming from Europe. A year after Trump pulled the USA 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. The company announced on Monday that European Union tariffs on its motorcycles have jumped between 6% and 31%, resulting in an average increase of $2,200 per exported motorcycle.




A motorcycle is seen at the Harley-Davidson Museum in Milwaukee on August 31, 2013.

"We can not speculate about how this morning's announcement will impact employment in the U.S. Domestic sales are what drive production and employment at Harley's U.S. facilities".

The EU, like Canada, Mexico and China all are aiming retaliatory tariffs at targets aimed to weaken Trump and the GOP in key political battlegrounds. "President's beloved stock market took another header Monday on news of more restrictions on investment into the USA, and the Dow Jones Industrial Average is now down for 2018".

"In the near-term, the company will bear the significant impact resulting from these tariffs, and the company estimates the incremental cost for the remainder of 2018 to be approximately $30 to $45 million", Harley said in a regulatory filing. "Harley must know that they won't be able to sell back into USA without paying a big tax!"

"This is further proof of the harm from unilateral tariffs", AshLee Strong, a Ryan spokeswoman, said.

Harley-Davidson is an American company originally founded in Milwaukee, Wisconsin, by two friends working out of a backyard.

But the company said it expected increasing production in its global plants would require additional investment and could take as long as 18 months.

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