Harley-Davidson, Blaming Tariffs, Will Shift Some Manufacturing Overseas
- Author: Eleanor Harrison Jun 27, 2018,
Jun 27, 2018, 3:05
Trump's tirade continued Tuesday morning, warning Harley-Davidson that "they won't be able to sell back into USA without paying a big tax!".
"Harley-Davidson expects ramping up production in worldwide plants will require incremental investment and could take at least nine to 18 months to be fully complete", the company said.
The new taxes are meant to answer tariffs the Trump administration is requiring on steel and aluminum imports from Europe.
The EU's top trade official today said the decision of Harley-Davidson to shift some manufacturing of its iconic motorcycles overseas, which President Donald Trump criticised, was a natural outcome of a protectionist United States trade policy. "Harley must know that they won't be able to sell back into U.S. without paying a big tax!" he said in another tweet.
Harley-Davidson's objective is to fulfill dreams of personal freedom for customers who live in the European Union and across the world, and the company remains fully engaged with government officials in both the USA and the EU helping to find sustainable solutions to trade issues and rescind all tariffs that restrict free and fair trade.
The maker of the iconic American motorcycle said in a regulatory filing on Monday that European Union tariffs on its motorcycles exported from the USA jumped between 6 per cent and 31 per cent, which translates into an additional, incremental cost of about $US2,200 ($3,000) per average motorcycle exported from the U.S. to the EU.
Harley-Davidson said that shifting targeted production from the U.S.to global facilities could take at least nine to 18 months to be completed. In early 2018, the motorcycle manufacturer said it would be forced to close a factory in Kansas City and downsize production at a facility in York, Pennsylvania, a move that cut roughly 260 jobs, due to weakening bike sales overseas.
The news has come as a major surprise for Trump, who has been continually raising the issue of high import tariffs on the motorcycle manufacturer elsewhere.
Trump's comments Tuesday aligned with union leaders' criticism of Harley.
Harley-Davidson already manufactures in India, according to James Hardiman of Wedbush Securities.
The Milwaukee-based motorcycle manufacturer sold almost 40,000 bikes in the European Union, its largest market outside of the US, last year.
These European Union tariffs against specific USA products was meant as retaliation for Trump's imposition of tariffs against steel and aluminum imports from the European Union.
Harley has also long lobbied against retaliatory tariffs, saying they put the company at a competitive disadvantage. Europe is a critical market for Harley-Davidson.
Shares of Milwaukee-based Harley-Davidson fell 46 cents, or 1.1 percent, to $41.11 on Tuesday. Harley-Davidson expects these tariffs will result in an incremental cost of approximately $2,200 per average motorcycle exported from the U.S.to the EU.
Rep. Adam Kinzinger, R-Ill., said Trump's attack on Harley-Davidson is an example of the president "punching down".
The company said it will provide more details on tariff-related plans when it reports second-quarter earnings on July 24. The company said the revenue generated from the European Union countries is second only to America.
In the short term, Harley says it will absorb the cost of the tariffs, rather than passing it on to customers. We are opening up closed markets and expanding our footprint.
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. "The best way to help American workers, consumers, and manufacturers is to open new markets for them, not to raise barriers to our own market".