Published: Tue, June 26, 2018
Markets | By Josh Butler

Harley-Davidson moves motorcycle production away from U.S. to avoid European Union tariffs

Harley-Davidson moves motorcycle production away from U.S. to avoid European Union tariffs

In a filing made Monday with the Securities and Exchange Commission, Wisconsin-based Harley-Davidson disclosed plans to move some of its manufacturing facilities from the Rust Belt to the Old World in the hopes of avoiding higher costs created by new European Union tariffs that target American-made motorcycles, along with other cultural products like whiskey and blue jeans.

In a stock market filing, the company said the EU's reaction to Donald Trump's steel tariffs, which will add $2,200 (£1,657) to the average cost of a motorcycle exported from the USA to Europe, will result in up to $100m of extra charges over the next couple of years.

Instead, it will eat $30 million to $45 million for the rest of this year and $90 to $100 million annually.

Harley-Davidson has been relying on Europe and other global markets to help offset declining sales in the U.S., 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.

The company said: "Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally".

US President Donald Trump slammed Harley-Davidson's decision to move some production of motorcycles overseas after Brussels retaliated against his tariffs.

Harley's stock fell as much as 7% during trading Monday.

Mr Trump said he was surprised the motorcycle maker had been "the first to wave the white flag".

Trump criticized Harley's decision and, in a cryptic tweet, suggested it ultimately would not face tariffs.

The EU's tariffs primarily affect products made in Republican-majority states and could threaten Trump's party in the November midterm elections, reports the Independent.

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Bikes destined for the European Union were made less viable by levies that'll boost costs for the company by about US$100 million (NZ$145 million) a year.

"Unfortunately, this confirms my concerns and is a far too predictable outcome of policies that give companies like Harley-Davidson incentives to make their products elsewhere". The latest victim of Trump's tariffs is our very own Harley-Davidson.

It's not like Harley-Davidson only manufactures its products in the United States right now, though.

Harley-Davidson is moving some of its production outside of the United States to avoid the impact of steep new European Union tariffs targeting American-made motorcycles.

Already, Harley had announced plans to close a factory in Missouri and build one in Thailand, after Trump pulled the United States out of the Trans-Pacific Partnership, the free-trade agreement with a bloc of Asian countries including New Zealand that would have lowered barriers to key markets.

Trump hosted executives from the Milwaukee-based company and the union officials representing its workers previous year at the White House.

An employee tends to Harley Davidson Motorcycles at the Boston Harley Davidson dealership in Revere, Massachusetts, USA 25 June 2018.

At the White House as he boarded the presidential helicopter he had ignored questions on the topic. It also has manufacturing operations in Australia, Brazil, India and Thailand.

Harley-Davidson said it will not raise its prices to avert "an immediate and lasting detrimental impact" on sales in Europe. Brussels levied that penalty in response to Trump's tariffs on steel and aluminum imports. The EU threatened that its payback for those levies would be to boost taxes on U.S. motorcycles, Levi Strauss jeans and bourbon whiskey.

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