Harley-Davidson Say Tariffs Prompting Production Move
Harley-Davidson Inc. (NYSE: HOG) has announced that the production of motorcycles sold in Europe will move from U.S. factories to international facilities to avoid paying a recently enacted 25 percent tariff. In a regulatory filing, the company reported that EU tariffs on motorcycles exported from the U.S. have now jumped between 6 percent and 31 percent. According to the company’s calculations, the tariffs will add about $2,200 per average motorcycle exported from the U.S. to the EU.
Harley-Davidson had warned before the tariffs were enacted that it could negatively impact its sales. The EU is its second-largest market after the United States, making up almost 16.4 percent of the company’s worldwide sales. It sold almost 40,000 motorcycles there last year, compared with 147,972 motorcycles in the U.S.
This is not the first time the company has moved production overseas to avoid tariffs. In May 2017, Harley-Davidson announced the planned construction of a plant in Thailand to serve its Southeast Asia markets. This allowed the company to avoid tariffs on imported motorcycles in the region. The company also has factories in Australia, Brazil and India.
The EU is imposing retaliatory tariffs on $3.4 billion worth of American exports in an escalating trade war with the Trump administration. The Trump administration is imposing its own duties on European steel and aluminum. According to a statement from White House press secretary Sarah Huckabee Sanders, “The EU is attempting to punish U.S. workers with unfair and discriminatory trade policies, and President Trump will continue to push for free, fair and reciprocal trade and hopes that the EU will join us in that.”
President Donald Trump tweeted that he’s surprised at the iconic American motorcycle maker’s decision. He wrote: “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”
The decision’s impact on Harley-Davidson’s U.S. workers was not immediately clear. Harley-Davidson said in prepared remarks that the company “maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally.”