Stung by tariffs, Harley shifts some motorcycle production overseas

Alicia Cross
June 27, 2018

The European Union has enacted tariffs on various us -manufactured products, including Harley-Davidson motorcycles.

Harley-Davidson Inc. sold nearly 40,000 motorcycles in the European Union previous year, its second-largest market after the United States, according to the company.

In late April, Harley said Mr Trump's metal tariffs would inflate its costs by US$15 million to US$20 million this year on top of already rising raw material prices that it expected at the start of the year.

Harley-Davidson plans to move a sizable portion of the motorcycles it produces outside of the USA, blaming the escalating tariff war for spiraling costs in one of its biggest markets. "Harley must know that they won't be able to sell back into US without paying a big tax!".

President Donald Trump sought today to avoid blame for Harley-Davidson's decision to move some motorcycle production overseas and threatened to tax the manufacturer "like never before!" as punishment for the planned production shift. "Harley must know that they won't be able to sell back into USA without paying a big tax!" The tariffs imposed by the European Union, which he says has "long taken advantage of the U.S. in the form of Trade Barriers and Tariffs", would "all even out" soon, and he demanded Harley-Davidson be patient as his administration exerted pressure on other countries to drop trade barriers against the US.

The filing made no mention on the impact this would have on jobs for current Harley-Davidson employees in the USA, but noted that "Harley-Davidson will provide more details of the financial implications and plans to mitigate the impact of retaliatory European Union tariffs during the company's second quarter earnings conference call on July 24, 2018, at 8:00AM CDT".

Harley-Davidson said that shifting targeted production from the United States to worldwide facilities could take up 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. "Taxes just a Harley excuse - be patient!" "Made in America. Harley-Davidson". Europe is a critical market for Harley-Davidson.

As a manufacturer of big motorcycles, Harley-Davidson is one of a handful of brands that are recognizable symbols of America's self-image.

The European Union, she alleged, is attempting to punish USA workers with unfair and discriminatory trade policies, and Trump will continue to push for free, fair and reciprocal trade in hopes that the EU will join is in that. The company also said it is not building a new plant in Europe.

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Analysts at Baird Equity Research cut its 2018 profit estimates for Harley-Davidson to US$3.70 per share from US$3.90 and now expect 2019 profit of US$3.85, down from US$4.20.

Harley-Davidson shares closed down 0.6 percent at $41.32, after falling almost 6 percent on Monday.

Trump said he's getting other countries to reduce and eliminate tariffs and trade barriers, and to open up markets.

Later that day Trump said the company was waving the "white flag" and surrendering after he had praised the company numerous times and invited its executives to the White House. The EU has responded in kind, levying a tariff on several American products.

On Monday, the vice president of the European Union's governing body said that Europe and China will form a group aimed at reforming global trade rules.

Wisconsin's elected leaders said the decision pointed to the need to expand markets.

Trump has previously cited the motorcycle maker as an example of a USA company hurt by foreign trade barriers. "The European Union is trying to punish USA workers because they have engaged repeatedly in unfair trade practices, and the president is saying enough is enough", she said.

Other reports by Free-Prsite

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