Harley Davidson Motorcycles Shifts Production Overseas In Response To EU Tariffs

Harley Davidson Motorcycles said it will take a hit of $30 million to $45 million for the rest of 2018. The company won't raise prices for customers, but will move some production out of the United States.

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Harley Davidson Motorcycles said it will take a hit of $30 million to $45 million for the rest of 2018. The company won't raise prices for customers, but will move some production out of the United States.

When the President of the United States Donald Trump threatened to escalate a trade war with Europe by imposing a 20 percent tariff on all U.S. imports of European Union-assembled vehicles via Twitter, European Auto Stocks Index immediately reacted, cratering. Shares of U.S. automakers Ford Motor Co and General Motors Co fell, and then recovered, Reuters reported.

After Trump’s threats, as the Inquisitr reported, the European Union issued an alarming warning, stating that Trump’s tariffs on European Union automobiles and car parts could affect $300 billion in trade. Authored by the European Commission, a report stated that Trump tariffs would boomerang across the pond, and lead to the loss of 180,000 U.S. jobs.

While not officiated, the trade war Donald Trump has been escalating with the European Union was, apparently, interpreted by some manufacturers as a signal to shift production overseas. As CNN is reporting, Harley Davidson Motorcycles is shifting production overseas, promptly reacting to retaliatory tariffs from the European Union.

For motorcycles, the European Union is raising its 6 percent tariff to 31 percent, CNN notes. Meaning, each Harley Davidson bike is now about $2,200 more expensive to export, according to the company. Harley Davidson Motorcycles said it will take a hit of $30 million to $45 million for the rest of 2018, but won’t raise prices for customers.

In a Securities and Exchange Commission filing published today, Harley Davidson said that the retaliatory tariffs imposed by the European Union would have “an immediate and lasting detrimental impact to its business in the region,” while noting that the company itself will bear the impact.

“To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the U.S. to its international facilities to avoid the tariff burden. Harley-Davidson expects ramping-up production in international plants will require incremental investment and could take at least 9 to 18 months to be fully complete. Harley Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally.”

According to NPR, Harley Davidson reported $5.65 billion in revenues last year, with Europe, where they sold 40,000 motorcycles, being the company’s largest market outside of the United States.

The American motorcycle manufacturer, headquartered in Milwaukee, Wisconsin, did not say which of their three American factories would be affected. Apart from having manufacturing operations in York, Pasadena, Kansas City, Missouri, and Menomonee Falls, Wisconsin, Harley Davidson has factories in Thailand, Brazil, India, and Australia.

European Union’s tariffs are, CNN notes, a response to Donald Trump’s tariffs, and the EU is imposing tariffs on $3.2 billion worth of American goods.