Harley Davidson, the iconic motorcycle brand, will begin moving some of its production out of the United States in an effort to avoid retaliatory tariffs on American goods imposed by the European Union.
Harley-Davidson will move some production out of the US to avoid EU retaliatory tariffs https://t.co/7j8nc9XKOQ https://t.co/Gi941KMopt— CNN Breaking News (@CNN Breaking News)1529930380.0
Earlier this year, President Donald Trump announced 25 percent tariffs on imported steel and aluminum from Europe and Asia. In response, the EU has levied additional import taxes on American products, including motorcycles, orange juice, bourbon, peanut butter, motorboats, cigarettes, and denim.
These new tariffs would hit Harley Davidson particularly hard - the EU is raising tariffs on American motorcycles from six percent to 31 percent.
Harley Davidson has said the new tariffs would make every motorcycle $2,200 higher to export, and the total cost of the new tariffs could top $100 million.
The company doesn't plan on raising prices for its customers, so it plans “to shift production of motorcycles for EU destinations from the U.S. to its international facilities to avoid the tariff burden.”
Harley Davidson expects to lose between $30 and $45 million this year.
NEW: Harley-Davidson says it will not raise prices to cover costs of retaliatory EU tariffs that were brought in re… https://t.co/9CE6R0ZVKe— MSNBC (@MSNBC)1529929274.0
In a Monday filing, Harley Davidson wrote:
Harley-Davidson believes the tremendous cost increase if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses.
In April, Harley Davidson revealed that it would be shifting some of its production to Thailand after Trump withdrew the United States from the Trans-Pacific Partnership.
Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama. We already have BIL… https://t.co/OxSaor5rl3— Donald J. Trump (@Donald J. Trump)1523589316.0
Harley Davidson’s CEO Matt Levatich said building a Thai plant was a “plan B” in the event Trump pulled out of the TPP. The agreement “would have helped us a lot,” Levatich said.
Harley announced the closure of its Missouri plant and shifting resources to York, Pennsylvania, which the company says will result in 260 jobs being lost. The company also closed their Kansas City plant, which means shedding 800 jobs.
Of the Thailand factory, Levatich said:
We would rather not make the investment in that facility, but that’s what’s necessary to access a very important market. It is a direct example of how trade policies could help this company, but we have to get on with our work to grow the business by any means possible, and that’s what we’re doing.
Harley Davidson’s domestic sales declined in recent years. “U.S. retail sales plunged 12 percent this year through March and have dropped in 13 of the last 14 quarters,” writes Gabrielle Coppola of Bloomberg. In 2017 alone, worldwide sales slumped 6.7 percent.
To improve sales, Harley plans on introducing electric bikes that will be marketed to city residents. After announcing their “tuned-up turn around plan” on Tuesday, which also includes expanding research into consumer demands, the company’s stocks jumped 5.1 percent.
Harley's decision to move production out of the United States is at odds with Trump's claim that "trade wars are good and easy to win."
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with… https://t.co/lPSkkolNRP— Donald J. Trump (@Donald J. Trump)1519987834.0
This didn't go unnoticed on Twitter.
@thedailybeast It's so easy to win a trade war. Quote D. Trump.— hanspy (@hanspy)1529930132.0
"Hard to think of a more American icon getting screwed by the president," one person said.
@cnnbrk Hard to think of a more American icon getting screwed by the president.— MrB (@MrB)1529930682.0
Others noted Harley's move as evidence that Trump isn't bringing as many jobs back to the United States as he had promised.
@cnnbrk Ah yes, just one more example of trump "bringing jobs to the US". What a waste of skin this man is?!— Norman Shaw (@Norman Shaw)1529931235.0
@cnnbrk WOW-----WOWWW--- I Thought the Jobs From Overseas Were Suppose to Come This Way. Those TAX SCAMS & TARIFFS Are Really Working CLUMP.— Keith (@Keith)1529931042.0