Harley-Davidson to build motorcycles destined for European Union outside of U.S.

Alicia Cross
June 26, 2018

Trump's claim that "ultimately [Harley-Davidson] will not pay tariffs", appeared to imply that he believed that the European Union would reverse its decision.

Late Monday afternoon President Trump tweeted, "Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag".

Alden said that given those two compelling economic cases, Harley-Davidson could be just the start of a series of manufacturing relocations outside the US.

President Donald Trump's trade policy is backfiring on Harley-Davidson. The full-year tariff bill could reach $100 million, the company said. The measure came in response to new USA duties of 25 percent on steel and 10 percent on aluminum imposed by the Trump administration.

Harley forecast the EU's retaliatory tariffs would cost the company $US90 million ($121 million) to $US100 million ($135 million) a year. Shifting manufacturing to the European Union will allow the motorbike maker to avoid that hit-although it will take 9 to 18 months to ramp-up global plants, Harley-Davison says, and in the meantime the company is expecting to lose $30 million to $45 million during the transition.

Harley-Davidson now has overseas manufacturing plants in Brazil, India and Australia and is building a plant in Thailand. The president hailed the company as a model of American manufacturing, an industry he promised to restore. "We are hopeful the USA and European Union governments will continue to work together to reach an agreement on trade issues and rescind these tariffs".

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Since Harley-Davidson wants to avoid passing those new costs onto buyers in the form of higher prices, the Milwaukee brand is moving more production to its existing overseas plants in places like Australia, Brazil, India, and Thailand. However, earlier plans will continue to shutter a plant in Missouri and bring the facilities there to another existing plant in Pennsylvania. A year after Trump pulled the USA 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. Since then, he's increased tariffs on the EU, Mexico, Canada and China, and promised additional fees in response to any retaliation. Sales of the company's bikes have already been stung in recent years, with the initial bite of the recession followed by a general downturn in interest from Millennial riders. Harley-Davidson said it will shift some of its production outside of the United States to avoid the tariffs. Spokesperson Michael Pflughoeft said the company was "assessing the potential impact" on jobs.

Harley has warned consistently against tariffs, saying they would negatively impact sales.

"Not all barriers to trade originated with the current administration".

Harley-Davidson bikes are lined up at a bike fair in Hamburg, Germany, February 24, 2017.

In addition to being a possible economic harbinger, the loss of Harley-Davidson's production also comes as a symbolic blow to Trump.

Other reports by Free-Prsite

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