Harley Davidson Motorcycles Shifts Production Overseas In Response To EU Tariffs

Harley-Davidson To Move More Production Oversees Amid US-EU Trade Tensions
EU import tariffs force Harley to rethink
Author

28 June, 2018

Harley-Davidson says the shift to overseas production will take nine to 18 months to complete.

"Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag", Trump tweeted Monday as he departed for a campaign trip to SC.

The company's move is one of the most visible consequences of the trade disputes triggered by Mr Trump's decision to levy tariffs on steel and aluminium imports.

Trump says the duties are necessary to protect the USA steel and aluminium industries, which are vital to national security.

Additionally, retaliatory tariffs from the EU, Canada, Mexico, and more make it expensive to get finished goods into those markets. Trump has said he will follow through on these tariffs unless European leaders agree to remove tariffs they have on USA auto imports, but so far Europe's leaders have mostly shown signs of meeting Trump's tariffs with tariffs of their own.

For example, British-owned GFG Alliance, has said it plans to invest $5bn over several years to reopen a shuttered steel plant in SC.

"Twenty-first century trade is a lot more complex", Donovan writes, "it is estimated that 40% of global trade is within companies".

The new measures raise tariffs on U.S. motorcycles sold in the European Union from 6% to 31%, which for Harley-Davidson adds approximately $2200 to the final cost.

The Wall Street Journal reported that the Trump administration plans to impose curbs on Chinese investment in USA technology companies and high-tech exports to China. No production will be moving to Europe as a result of the tariffs, the company said.

Harley-Davidson said that shifting targeted production from the United States to worldwide facilities could take up to 18 months to be completed.

Media captionHow hogs and Harleys became weapons in a looming trade war. Demand for motorcycles has declined for each of the last three years among American buyers and is likely to decline in 2018 as well, Wedbush noted.

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But Trump appears to believe Harley-Davidson will manufacture products for the USA market overseas, which it so far has not indicated it plans to do with this move.

Shares of Harley-Davidson fell 0.6% on Tuesday.

June 26: Trump was furious about Harley Davidson's relocation plan.

The crisis began when the United States government imposed additional tariffs on steel and aluminium imports from the European Union (EU) region.

Trump enjoyed the support of a group called "Bikers for Trump" in his 2016 presidential campaign and he invited Harley-Davidson representatives to the White House in February 2017 shortly after he took office, greeting them with the words "Made in America, Harley-Davidson".

The company said it would not raise retail or wholesale prices for its dealers, and expects the tariffs to result in incremental costs of US$30 million to US$45 million for the rest of 2018.

"That was long before Tariffs were announced, " Trump said on Twitter. "Hence, they were just using Tariffs/Trade War as an excuse", Trump tweeted.

Trump on Tuesday criticized the company's decision in a series of comments on Twitter that contended the company already planned to move jobs overseas and was using the tariffs as a pretext.

The completion of this study could logistically provide Trump with a means to unilaterally impose tariffs on automobiles manufactured in Europe and shipped to the United States, potentially driving up the costs on cars made in Germany, for example.

China is due to retaliate in kind.


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