Harley-Davidson moves some production out of U.S. after tariffs

Harley-Davidson moves some production out of U.S. after tariffs

Harley-Davidson moves some production out of U.S. after tariffs

Each motorcycle will cost an average of US$2,200 extra after the European Union raised its tariff on imported U.S. bikes to 31 percent from 6 percent on June 22, the Milwaukee-based manufacturer said Monday in a regulatory filing.

Harley plans to absorb much of the cost increase tied to the EU's tariffs because passing it on to dealers or customers would make an "immediate and lasting detrimental impact" on its business, it said in the filing.

Walker says that's what he will push for in the wake of news that Harley-Davidson is shifting production of motorcycles headed for Europe from the U.S.to factories overseas due to increasing tariffs.

The company reports it sold about 40,000 motorcycles in the European Union market in 2017, and that "Europe is a critical market for Harley-Davidson".

In an SEC filing, the company said the tariffs will result in an additional cost of $2,200 per motorcycle exported from the U.S.to the EU.

The Dow fell by more than 300 points on Monday amid growing worries about trade.

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Trump hosted chief executive officer Matt Levatich and other Harley executives and union leaders for a White House listening session in February 2017 and hailed the motorcycle manufacturer as "a true American icon" and "one of the greats". In fact, his policies may play a role moving them to the very country he wanted to defend the company against.

Trump has threatened to widen the mounting trade dispute by imposing tariffs on European cars, saying in a tweet: "If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!".

Trump told the motorcycle manufacturer that it should "be patient" because "ultimately they will not pay tariffs" on products shipped into the European Union.

Harley has used global production to get around tariffs in other situations. That will add an estimated $90 million to $100 million annually.

Harley-Davidson's move is already drawing the ire of tariff critics, including members of the president's own party.

Harley-Davidson's warning is a huge blow for the Republican President, who says he is safeguarding jobs in the US's industrial hotspots. The Motorcycle maker announced that it would move production for European customers overseas to avoid retaliatory tariffs that could cost it up to $100 million per year.

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"We are now assessing the potential impact on our USA facilities", Harley-Davidson spokesperson Michael Pflughoeft told Bloomberg.

Harley-Davidson Inc.'s headquarters in Milwaukee.

Shares in Harley-Davidson were down by 4.1 percent to $42.38 (£31.92) shortly after the market opened. A year after Trump pulled the U.S. out of a 12-nation trade deal, the Trans-Pacific Partnership, in January 2017, Harley announced it would close its factory in Kansas City, Missouri, and consolidate production in York, Pennsylvania, eliminating about 260 jobs.

"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", International President Robert Martinez said in a statement.

Harley-Davidson did not immediately return a request for comment. The affected American motorcycle brands will certainly be Harley-Davidson and Indian Motorcycle, which will see higher sticker prices in Europe, and is certain to affect sales.

In turn, it also incentivizes firms to move their production overseas since other countries may have lower tariffs - or no tariffs - on the same intermediate product.

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On Monday, the vice president of the European Union's governing body said that Europe and China will form a group aimed at updating global trade rules to address technology policy, government subsidies and other emerging complaints in a bid to preserve support for worldwide commerce.

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