Harley-Davidson, blaming tariffs, will shift some manufacturing overseas
Harley-Davidson, stung by new tariffs, said it will shift some motorcycle production to factories outside the U.S. The motorcycle manufacturer said in a regulatory filing that it's shifting production of motorcycles heading to Europe from the U.S. to overseas factories. EU tariffs on its motorcycles exported from the U.S. have surged from 6 percent to 31 percent.
Harley-Davidson said that it will not raise its prices due to "an immediate and lasting detrimental impact to its business in the region," although the tariffs are adding about $2,200 in costs per motorcycle exported from the U.S. to the EU.
The EU has boosted tariffs on American-made products including Harley-Davidson motorcycles, peanut butter and orange juice in response to President Donald Trump's decision to slap tariffs on European steel and aluminum. The EU's trade chief said last week that it was "left with no other choice" after Mr. Trump imposed tariffs of 25 percent on steel imports and 10 percent on imported aluminum from the EU on June 1.
"In the near-term, the company will bear the significant impact resulting from these tariffs, and the company estimates the incremental cost for the remainder of 2018 to be approximately $30 to $45 million," Harley said in the filing.
Timeline: over the next 18 months
Harley-Davidson said that shifting targeted production from the U.S. to international facilities could take at least nine to 18 months to be completed.
The company is already struggling with falling sales. In January, it said it would consolidate its Kansas City, Missouri, plant into its York, Pennsylvania, facility. U.S. motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession.
Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse - be patient! #MAGA
— Donald J. Trump (@realDonaldTrump) June 25, 2018
President Trump expressed surprise at the news on Twitter, not long after White House press secretary Sarah Huckabee Sanders complained during a press briefing on Monday that the European Union "is trying to punish U.S. workers" by increasing tariffs on American-made products.
Sanders accused the EU of repeatedly engaging "in unfair trade practices" and that Trump is saying "enough is enough."
The EU tariffs are retaliation for duties the Trump administration is imposing on European steel and aluminum. More potential pitfalls for Harley-Davidson and other U.S. manufacturers could be on the way.
Last week German automaker Daimler AG cut its 2018 earnings outlook, a change that it says is partly due to increased import tariffs for U.S. vehicles in China. Daimler produces vehicles in the U.S.
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 international commerce.
European Commission Vice President Jyrki Katainen said unilateral action by U.S. President Donald Trump in disputes over steel, China's technology policy and other issues highlighted the need to modernize the World Trade Organization to reflect developments in the world economy.
The Wall Street Journal reported that the Trump administration plans to impose curbs on Chinese investment in American technology companies and high-tech exports to China.