Tariffs Push Harley-Davidson to Produce Overseas

Tariffs Push Harley-Davidson to Produce Overseas

Then he goes on mildly threatening that should it move production overseas, Harley will not be able to sell back to the US without paying a big tax.

If it continues, Harley estimate the tariffs will cost them $90 - 100 million (£67 - 75 million) a year, which is approximately one third of their entire operating profit. Mr. Trump is right that the company announced plans to build a plant in Thailand long before the current tariff escalation.

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

Harley-Davidson in its US Securities and Exchange Commission (SEC) filing yesterday said that new retaliatory tariffs by the European Union (an increase from six per cent to 31 per cent) will result in an incremental cost of approximately Dollars 2,200 on an average motorcycle exported from the US to the 28-member trading bloc.

The company chose to build the Thailand plant a year ago after Trump pulled out from the Trans-Pacific Partnership, which would have lowered import tariffs on its bikes in some of the fastest-growing motorcycle markets in Asia.

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

Such a hike in price "would have an immediate and lasting detrimental impact" to Harley-Davidson's business in the region, the company says.

Harley-Davidson did not immediately respond to request for comment, but said the move overseas was to avoid European Union tariffs, not to sell in the U.S. market.

The Milwaukee-based company chose to build the Thailand plant a year ago after Mr. Trump pulled out from the Trans-Pacific Partnership, which would have lowered import tariffs on its bikes in some of the fastest-growing motorcycle markets in Asia.

In the wake of sluggish sales in the United States, Harley-Davidson announced in January it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania.

On Monday, the vice president of the European Union's governing body said that Europe and China will form a group aimed at updating global trade rules to address technology policy, government subsidies and other emerging complaints in a bid to preserve support for worldwide commerce.

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

Trump also suggested Tuesday morning that his adversarial approach to trade policy had only begun.

Harley-Davidson sales peaked at more than 1.1 million in 2005, but dropped during the recession.

The new European tariffs will make each Harley-Davidson motorcycle cost about $2,200 more to export.

Harley-Davidson said that shifting targeted production from the U.S.to global facilities could take at least nine to 18 months to be completed.

Shares of Harley-Davidson fell 0.6% on Tuesday. Trump tweeted early Tuesday. "Made in America. Harley-Davidson". "These sweeping tariffs are not examples of that by a long shot". Harley-Davidson said it will shift some of its production outside of the United States to avoid the tariffs. But the firm said Monday that it was shifting more production overseas specifically to blunt the impact of the tariffs imposed by Europe. In 2017, Harley-Davidson sold approximately 40,000 motorcycles in the European Union, representing 16% of its total sales.

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