Published: Tue, June 26, 2018
Money | By Hannah Jacobs

Trump Tariffs Just Got A Black Eye From Harley-Davidson

Trump Tariffs Just Got A Black Eye From Harley-Davidson

President Donald Trump sharply criticized American motorbike manufacturer Harley-Davidson's decision today to shift some of its production overseas, a move the company said it is making in order to avoid the president's tariffs.

The company sees an annual impact due to the tariffs of about $90 million to $100 million and expects an incremental cost of about $2,200 per average motorcycle exported from the United States to the EU.

In the meantime, it's planning to increase production in worldwide plants over the next 18 months. According to H-D's data, the manufacturer sold almost 40,000 bikes in Europe in 2017, its highest share of overall deliveries since 2011 and representing the second largest overall market around the world.

The company, however, said it would maintain a strong commitment to US-based manufacturing that riders value.

Harley-Davidson plans to shift some motorcycle production away from the USA to avoid the "substantial" burden of European Union tariffs.

Harley-Davidson says it's moving production of some of its motorcycles outside of the United States to avoid European Union tariffs. Companies are now coming back to America.

Trump responded angrily to the Harley-Davidson's announcement on Monday, saying he has fought hard for the 115-year-old Milwaukee-based company and was surprised by its plans, which he described as waving the "White Flag". Harley will soon begin shifting production for its Europe-bound motorcycles to the continent itself, a process that may take over a year.

The Wall Street Journal newspaper reports that the Trump administration plans to limit Chinese investment in American technology companies and high-tech exports to China. To avoid harming dealers and undermining its business, Harley said it will swallow the cost.

The Trump administration has started fights with trading partners around the world, imposing tariffs on imported steel and aluminum, provoking retaliation from close USA allies including the European Union, Canada, Mexico and Turkey.

They did not say which countries production will be moved to.

In January, the company said it was closing a factory in Kansas City, Missouri, and consolidating it into a York assembly plant.

The EU's retaliation to Trump's steel and aluminum levies will cost about US$2200 per motorcycle shipped to Harley's second-biggest market in the world, the company estimated in a filing on Monday. Case in point, Harley Davidson. While such a deal might still happen, trade tensions with China are likely to intensify this week as the US gets set to announce investment restrictions meant to keep key technology out of Beijing's hands. "President's beloved stock market took another header Monday on news of more restrictions on investment into the US, and the Dow Jones Industrial Average is now down for 2018".

The EU, like Canada, Mexico and China all are aiming retaliatory tariffs at targets aimed to weaken Trump and the GOP in key political battlegrounds. Tariffs will add $30-45 million to the company's expenses this year, amounting to "an immediate and lasting detrimental impact" to its business. Now he is expected to restrict technologies sold to China, and Chinese investment in USA companies. GOP Sen. Ron Johnson, who represents Harley's home state of Wisconsin, said the company's move was evidence the tariffs were a bad idea.

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