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Harley-Davidson will not raise prices to cover tariff costs

26 June, 2018, 16:19 | Author: Sara Gill
  • Harley-Davidson to shift some production out of US over EU tariffs

It estimated that the higher tariffs would add about $2,200 on average to every motorcycle exported from the United States to the bloc, so it said it would move the production of bikes bound for Europe outside the United States.

The International Association of Machinists and Aerospace Workers, which represents workers at the company's facilities in Wisconsin, Missouri and Pennsylvania, expressed septicism that the production shift was needed.

A week ago, a 25 percent tariff on steel and a 10 percent tariff on aluminum affecting trade partners Canada, Mexico and the European Union, was implemented by the Trump administration.

The shift in production is an unintended effect of Trump's administration imposing tariffs on European steel and aluminium early this month, a move created to protect USA jobs.

The manufacturer estimates that each bike will cost approximately $2,200 more to bring to Europe.

Not wanting to dent sales in key European Union 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.

Walker says that's what he will push for in the wake of news that Harley-Davidson is shifting production of motorcycles headed for Europe from the U.S.to factories overseas due to increasing tariffs. The company already has plants in Australia, Brazil and India, and it will soon open another facility in Thailand. While numerous company's efforts to grow its brand focus on Asia, the European market remained the second largest after the USA with about 40,000 in retail sales a year ago. Harley reports it will share more information on this shift in its second-quarter conference call set for 8 a.m. July 24. Harley-Davidson said it stood to lose as much as $100 million a year.

Harley Davidson, based in Milwaukee, is now planning to move the production of some of its motorcycles overseas.


These examples of job losses come amid promises from Donald Trump to save American jobs, casting doubt across the country about the effectiveness of Trump's tariff strategy for trade.

The new global production facilities could take at least nine to 18 months to be completed.

Despite Trump's assertion that "trade wars are good, and easy to win", however, Harley isn't so impressed. All three say they will be forced to close their plants unless they can get relief from the Trump administration's steel tariffs.

And U.S. companies are starting to see some of the less desirable consequences.

"Thank you, Harley-Davidson, for building things in America", Trump said at the time.

Trump hosted chief executive Matt Levatich and other Harley executives and union leaders for a White House listening session in February 2017 and hailed the motorcycle maker as "a true American icon" and "one of the greats".

Struggling to overcome a slump in USA 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. The company, which is headquartered in Speaker Paul Ryan's congressional district, is moving some production to Europe to avoid the tariffs.

But companies have warned that retaliatory tariffs could be devastating for business, or lead to higher prices for United States consumers.

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