Harley US plants lose out over Trump tarrifs

BBC News:  

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

Last week the EU introduced retaliatory tariffs on US goods, including bourbon, orange juice and motorcycles.

Wisconsin-based Harley-Davidson has assembly plants in Australia, Brazil, India and Thailand.

The company said it will raise investment in its international plants, but did not say which ones.

“To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the US to its international facilities to avoid the tariff burden,” the company said in an official filing to the US market regulator.

The firm said it expects the ramp up in production to take nine to 18 months.

The firm’s decision is one of the most visible consequences of the trade disputes triggered by US President Donald Trump’s decision to levy tariffs on steel and aluminium.

The tariffs, which Mr Trump says were necessary to maintain national security, have drawn retaliation from the EU, Canada, Mexico, India and others, while driving up metals costs for manufacturers in the US.

‘Only sustainable option’

Harley-Davidson, which derived about 40% of its revenue from international sales last year, said it remains committed to US manufacturing.

It said the tariffs made shifting production “the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe”.

The firm said the tariffs will add on average $2,200 (£1,660) to each bike exported to the EU from the US, as the import tax increases from 6% to 31%.

Harley, which sold nearly 40,000 motorcycles in the EU last year, said it plans to absorb those costs, which will add $30m to $45m to its expenses this year.

Passing the costs onto customers “would have an immediate and lasting detrimental impact to its business in the region”, the firm argued.

The majority of Harley’s motorcycles are currently built in the US, where the firm employed about 2,100 people at manufacturing facilities.

However, the firm had already announced plans to close a facility in Kansas City, Missouri, a decision workers said was due to the opening of a new facility in Thailand.

The company denied those claims, arguing the move was about boosting overseas sales.

Raising employment in manufacturing is a goal for Mr Trump. He has also threatened tariffs on foreign cars and auto parts, arguing that firms should make such products in the US.

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