Published: Tue, June 26, 2018
Finance | By Gustavo Carr

Harley-Davidson to take big hit from European Union tariffs

Harley-Davidson to take big hit from European Union tariffs

The iconic American motorcycle maker's decision to increase overseas production has drawn the wrath of US President Donald Trump, who accused Harley-Davidson of surrendering before his trade war could even start.

Harley said in a Monday filing that European Union tariffs on its motorcycles built in the us just jumped from 6% to 31%, adding roughly $2,200 to the cost of each.

Harley-Davidson has been relying on Europe and other worldwide markets to help offset declining sales in the USA, where the baby boomers who have long bought the vehicles are aging and younger consumers are not taking to the motorcycles in a big way. Besides its U.S. plants, Harley-Davidson maintains manufacturing facilities in Australia, Brazil, India and Thailand, according to its website.

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

President Trump, pushing a get-tough trade policy aimed at trade partners he says have taken advantage of the USA for years, has cited Haley-Davidson as a company hurt by Europe's trade barriers.

Mr Trump has also threatened tariffs on foreign cars and auto parts, arguing that firms should make such products in the US. He continued on to say that the European Union would "do what we have to do to rebalance and safeguard" against the tariffs.

In addition to the metals tariffs, the Trump administration has also said it will impose tariffs on $34bn of Chinese goods starting on 6 July as punishment for violations of intellectual property protections. It anticipates the cost for the rest of the year to be approximately 30 million dollars (£22 million) to 45 million dollars (£40 million).

"Therefore, Harley-Davidson will not raise its manufacturer's suggested retail prices or wholesale prices to its dealers to cover the costs of the retaliatory tariffs". And the vast majority of Harley-Davidson motorcycles sold in India are produced in the country so the Indian tariffs don't apply to them anyway.

The shift of production - and jobs - from the U.S.to factories in Europe was disclosed in a regulatory filing Monday.

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A motorcycle is seen at the Harley-Davidson Museum in Milwaukee on August 31, 2013.

Follow Harley-Davidson's stock price in real-time here.

The decision is a blow to the Trump administration, which has defended its imposition of tariffs on the European Union as part of a strategy to boost jobs in the US.

Harley-Davidson did not immediately respond to a request for comment Tuesday. Earlier this year, Harley-Davidson announced it would consolidate its Kansas City, Missouri facility into its existing York, Pennsylvania one.

Harley-Davidson's global factories are in Manaus, Brazil; Bawal, India; and Rayong, Thailand.

Harley-Davidson said that shifting targeted production from the U.S. to worldwide facilities could take up to 18 months to be completed.

Correction: Harley-Davidson said it will be moving production to its worldwide factories, not necessarily to factories in Europe.

Retaliation by Brussels targeted producers in Republican states where Trump draws much of his support - including bourbon whiskey, Levi's jeans - and is expected to raise the prices of U.S. goods worth up to €2.8bn (£2.5bn).

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