WHAT’S BEING CLAIMED:
- Harley-Davidson is transferring some production of its motorcycles for European market out of the U.S. to avoid EU retaliatory tariffs.
- The American motorcycle manufacturer announced the move on Monday, after EU raised its 6% tariff to 31% for motorcycles, causing sticker price an increase of $2,200.
- This is one of the most direct evidence so far of the consequences of the trade war between the United States and other countries.
After President Donald Trump declared trade war against other countries, American companies are now facing its consequences. Harley-Davidson said it could incur up to $100 million loss each year due to tariffs. Its stock (HOG) fell 6%.
“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option,” the company stated in a regulatory filing.
Trump expressed his surprise about the company’s decision, tweeting “that Harley-Davidson, of all companies, would be the first to wave the White Flag.”
“Taxes just a Harley excuse – be patient!” he added.
On Friday, the EU began applying tariffs on $3.2 billion worth of American products, such as motorcycles, motorboats, denim, cigarettes, bourbon, orange juice, and peanut butter. It’s EU’s retaliation to the tariffs the Trump administration imposed on steel and aluminum imports from Europe.
Harley-Davidson is not increasing motorcycle prices for customers or retailers.
“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 stated.
Harley-Davidson did not mention if any U.S. workers are at risk. The Milwaukee-based motorcycle manufacturer has more than 6,000 employees worldwide.
According to the company’s spokesperson, Michael Pflughoeft, the company was “assessing the potential impact” on jobs.
After the U.S., Europe is its second-largest market. Almost 40,000 motorcycles were bought by in 2017 compared with nearly 148,000 in the U.S.
As U.S. sales tumble, Europe is becoming a good market. Harley-Davidson’s US bike revenue dropped 8.5% last year from 2016, but only fell 0.4% in Europe, CNN Money reported.
The company said early this year that it was shutting down a factory in Kansas City, Missouri, and merging it into a York, Pennsylvania, assembly plant.
Source: CNN Money