Harley-Davidson moves some work from US due to tariffs

Harley-Davidson will see its costs increase by as much as $100 million a year due to the retaliatory EU tariffs imposed last week
AFP

New York (AFP) – Harley-Davidson plans to shift some manufacturing of the iconic motorcycles overseas to avoid retaliatory European tariffs imposed last week, the company said Monday.

The European Union hit the American motorcycles with duties of 31 percent on Friday, up from six percent, boosting the cost to EU consumers by about $2,200.

The EU targeted the US vehicles as part of its rebuttal to President Donald Trump’s tariffs on imported aluminum and steel, one aspect of his multi-front trade war.

Moving production to overseas factories is expected to require nine to 18 months, so in the near-term Harley-Davidson will absorb the costs of EU tariffs, the company said in a regulatory notice.

Not wanting to dent sales in key EU markets, the company will “bear the significant impact resulting from these tariffs,” which will add an estimated $30 to $45 million in costs for the remainder of 2018 and $90 to $100 million annually.

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

“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe.”

Europe is Harley-Davidson’s second biggest market after the US. The company reported $521.8 million in earnings in 2017 on $5.6 billion in revenue.

Executives in Harley-Davidson were among the first to visit the White House in February 2017 shortly after Trump took office. 

Trump praised Harley-Davidson as an “American icon, one of the greats” and expressed confidence the company would expand US manufacturing under his administration.

But that status made the company a target for EU retaliation along with bourbon and blue jeans.

The products have “a strong symbolic political impact,” said European Commission Vice President for trade Jyrki Katainen.

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