Harley-Davidson is Moving Some Production Outside of US to Avoid EU Tariffs

Harley-Davidson said yesterday it would move the production of motorcycles that get shipped to the European Union from the United States to the company’s international facilities. The trading bloc’s retaliatory tariffs should cost the company $90 million to $100 million per year, according to forecasts.

The shift in production is a direct result of U.S. President Donald Trump’s administration imposing tariffs on European aluminum and steel.  Although this move was supposed to protect US jobs, it seems like it’s doing the exact opposite, because, in response to the U.S. tariffs, the European Union has started charging import duties of 25% on a wide range of products originated from the United States, including big motorcycles.

In a regulatory filing on Monday, Harley-Davidson said the result on the retaliatory duties would be incremental cost of around $2,200 per average motorcycle exported from the U.S. to the European Union – but that the company wouldn’t raise retail prices for its dealers to cover the costs of the tariffs.

The company forecasts the tariffs to result in an incremental cost of $30-$45 million for the rest of 2018.

“Harley-Davidson believes the tremendous cost increase if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region,” the company said, CNBC reports.

Harley said moving production at its overseas international plants will take at least 9 to 18 months. After the definite decision to close the Kansas City plant, Harley-Davidson employees are starting to fear for their jobs, given these new momentums.

The filing said the company would provide more details about the impact of the new tariffs on July 24, when second-quarter earnings are due.

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Harley won’t raise prices due to EU tariffs from CNBC.

Source: CNBC