Harley-Davidson to focus on worldwide production due to European Union tariffs

Alicia Cross
June 28, 2018

It's unclear how Harley-Davidson's plans will be received by motorcycle owners.

On Tuesday, President Donald Trump railed against Harley-Davidson's (HOG) announcement that it would move some manufacturing overseas after the European Union enacted tariffs that would impact Harleys built in the USA but sold in Europe.

US motorcycle maker Harley-Davidson announced on Monday that it would shift some production of its motorcycles overseas to avoid retaliatory tariffs imposed by the European Union (EU) in response to the USA tariffs on steel and aluminum imports.

"Companies are now coming back to America", he wrote.

Economists said Harley's decision to shift production outside of the USA is an expected result of Trump's increased trade restrictions and likely is a sign of things to come. "That was long before the tariffs were announced", the President went on. "Hence, they were just using Tariffs/Trade War as an excuse", Trump tweeted. The company announced plans to build the new factory in Thailand after the Trump administration withdrew from the Trans-Pacific Partnership, a trade agreement that would have lowered Asian tariffs on some of its motorcycles. - Harley-Davidson is not looking to import bikes manufactured overseas back to the U.S. The motorcycles made abroad will only sell abroad, while U.S. bikes will continue to be made in the U.S.

The Wisconsin-based motorcycle manufacturer, Harley-Davidson, has announced plans to relocate its production for European Union exported items away from the US.

"Harley-Davidson maintains a strong commitment to US -based manufacturing which is valued by riders globally", the company said in a statement.

"We need to be there and be relevant", Levatich said.

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Trump ridiculed the company for building motorcycles overseas. "Their employees and customers are already very angry at them", Trump said on Twitter, without providing any evidence.

US President Donald Trump has slammed motorcycle maker Harley-Davidson, for planning to move some of its production out of the US.

"They'll be, actually, for over there, they're going to try to go around the tariff tax that way", Capra said. For decades, he has claimed that the United States is being taken advantage of by other nations.

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A current advert for a Harley-Davidson bike in Bangkok. "Europe is a critical market for Harley-Davidson", said the company in a prepared statement.

So far, though, those hurt by Trump's tariffs do not appear to be European Union countries but American workers.

"The European Union is trying to punish USA workers because they have engaged repeatedly in unfair trade practices".

The Thai plant is also meant to help serve a vast market in mainland China. And McAllister of Harley-Davidson said the Thai plant would lower the transport and shipping time to the Chinese market to around five to seven days, from 45 to 60 days from the United States.

Harley estimates the European tariff increase from 6 percent to 31 percent on motorcycles would add $2,200 to the cost of an average motorcycle exported from the U.S.to the EU. Even Harley Davidson is not exercised over the issue and it seeks to expand its footprint overseas.

President Trump will reportedly announce a new set of restrictions on trade with China this week.

Struggling to overcome a slump in US demand, Harley has been aiming to boost sales of its iconic motorcycles overseas to 50 percent of total annual volume from about 43 percent now. He didn't mention President Trump by name but said tariffs are "basically taxes".

Harley-Davidson executives met with Trump at the White House past year after Trump cancelled a visit to the company's headquarters in Milwaukee because protests had been planned.

Europe and overseas markets are now Harley's growth markets.

"Our region is well renowned for the quality of its staff and its long tradition in the automobile and mechanical engineering sectors", Straumann said in the letter to the company.

Harley-Davidson's decision to cover short-term costs of the tariffs hit the company's stock hard on Monday.

Trump vowed to make the iconic motorcycle maker great again when he took office a year ago. The company said in January that it would close its motorcycle plant in Kansas City, Missouri, in a cost-cutting move.

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