Harley-Davidson To Move More Production Oversees Amid US-EU Trade Tensions

Tuesday, 26 Jun, 2018

The EU tariffs are only the latest blowback Harley has faced from Trump's trade policies.

"We are now assessing the potential impact on our USA facilities", said Harley-Davidson spokesman Michael Pflughoeft.

While the company said that it expects it will take "9 to 18 months" to increase production at its facilities overseas, the move is already drawing the ire of tariff critics, including members of the president's own party.

Harley-Davidson said it will not raise its prices due to "an immediate and lasting detrimental impact to its business in the region", according to The Associated Press. For that reason, Harley said it would absorb the additional costs. However, that could take up to 18 months to complete. A year after Trump pulled the United States out of a 12-nation trade deal, the Trans-Pacific Partnership, in January 2017, Harley announced it would close its factory in Kansas City, Missouri, and consolidate production in York, Pennsylvania, eliminating about 260 jobs.

United States motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession. It wasn't immediately known whether any other facilities would be consolidated.

"A company that is as connected to America, and Americana, as Harley is probably going to be laying off US workers in favor of foreign workers and going to be losing money as a result of this", said James Hardiman, an equity research analyst with Wedbush Securities.

Trump hosted executives from the Milwaukee-based company and the union officials representing its workers previous year at the White House.

Harley-Davidson said Monday that new European taxes on imported motorcycles will have a "significant impact" on its business, increasing the cost of motorcycles by $2,200 on average.

Not only is this going to probably cost Americans jobs, but it's also going to put a real crimp in Harley's whole "Made in America" thing.

The shift in production is an unintended outcome of Trump's administration imposing tariffs on European steel and aluminium early this month, a move created to protect USA jobs. He has already imposed $50 billion in tariffs on China and threatened another $400 billion. In response, most of its production for bikes sold in the European Union will be moved to Europe. "Can't blame them. Many companies are being put in very hard positions".

The company chose to build the Thailand plant in response to Trump's decision to pull 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 Trump administration's tariffs have tended to target raw materials like steel or aluminum, or building block materials like solar modules.

Wisconsin's elected leaders said the decision pointed to the need to expand markets.

The tariffs will hit home for House Speaker Paul Ryan.

Daimler, which also produces its premium Mercedes cars in the U.S., said its 2018 profits were expected to be hit by higher Chinese tariffs on imports of American-made cars.