Harley-Davidson, stung by European tariffs, shifts some U.S. production overseas

US trade policy drives Harley Davidson to create EU jobs

In a regulatory filing on Monday, Harley-Davidson said each of its motorcycle shipped to the European Union would cost about $2,200 (€1,880) more after the bloc raised its levies on imported U.S. bikes to 31 percent from 6 percent on June 22.

Harley Davidson, based in Milwaukee, is now planning to move the production of some of its motorcycles overseas.

In addition to being a possible economic harbinger, the loss of Harley-Davidson's production also comes as a symbolic blow to Trump.

President Donald Trump accused Harley-Davidson Monday of waving "the white flag" after the iconic motorcycle brand, citing the financial burden of new tariffs levied against American products in the trade dispute between the president and the European Union, disclosed plans to relocate some of its production overseas.

Earlier this year the White House imposed a 25% tariff on steel and a 10% tariff on aluminium imports from several countries, including the 27-member EU.

The Associated Press reports that while President Donald Trump is pointing to Harley as a prime example of an American business as those hurt by trade barriers, the bike maker has regularly warned against imposing tariffs. The company's US factories are in York, Pa.; Kansas City, Mo., and Menomonee Falls, Wis. It has three assembly plants outside the United States - one each in Brazil, India and Thailand.

Adding to the difficulty facing the company were steel and aluminum tariffs on the EU, Canada and Mexico finalized by the Trump administration at the start of June.

Harley-Davidson Inc. sold nearly 40,000 motorcycles in the European Union previous year, its second-largest market after the United States, according to the company.

"A company that is as connected to America, and Americana, as Harley is probably going to be laying off US workers in favor of foreign workers and going to be losing money as a result of this", said James Hardiman, an equity research analyst with Wedbush Securities.

President Donald Trump has used Harley-Davidson as an example of a USA business that is being harmed by trade barriers.

Lynch did not say what effect the expected price increases would have on European sales, noting that "we continue to invest behind the growth of American whiskey in the EU". 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.

The European Union is taxing a range of imports from the U.S. in response to President Donald Trump's decision to slap tariffs on European steel and aluminum.

Trump has said that "trade wars are good and easy to win", but users of imported steel and aluminum already are feeling the pain of the administration's policies. Harley's motorcycles division employs about 5,200 workers.

A Harley-Davidson motorcycle on the production line in Kansas City, Missouri.

Last week the European Union imposed tariffs on USA goods including bourbon whiskey, orange juice and motorcycles.

The company said it expects the tariffs to result in incremental costs of $30 million to $45 million for the rest of 2018 and $80 million to $100 million on a full-year basis.

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