"To avoid those trade penalties in the long term, Harley will scale back US operations over the next 18 months, making more bikes overseas". The legendary bike-maker says the production decision comes after it was caught between the new steel and aluminum duties imposed by President Trump, and retaliatory tariffs implemented by the European Union.
The E.U. had specifically targeted Harley, as well as other familiar American brands like Jack Daniel's, to extract maximum punishment after Trump hit the bloc with the steel and aluminum penalties.
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.
That will make each bike about $2,200 more expensive to export, Harley-Davidson said.
The company said it would not raise retail or wholesale prices for its dealers, and expects the tariffs to result in incremental costs of US$30 million to US$45 million for the rest of 2018.
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The complexity and unpredictability of trade disputes became especially apparent Monday when iconic American motorcycle maker Harley-Davidson announced its decision to move some work overseas in order to escape tariffs that the European Union has imposed in response to the president's earlier tariffs on steel and aluminum. Shifting manufacturing to the European Union will allow the motorbike maker to avoid that hit-although it will take 9 to 18 months to ramp-up global plants, Harley-Davison says, and in the meantime the company is expecting to lose $30 million to $45 million during the transition.
The Wisconsin-based company already has factories in Brazil and India, and is opening one in Thailand, while closing its Australian plant. Rather than pass on those costs to consumers in higher prices, Harley said it would absorb them for now while it begins planning to move production offshore.
In 2017, Harley sold almost 40,000 new motorcycles in Europe which accounted for 14 percent of the company's sales a year ago. On a full-year basis, the company estimates the aggregate annual impact will be approximately $90 to $100 million. The tariff on motorcycles rose from an initial 6 percent to 31 percent. And the vast majority of Harley-Davidson motorcycles sold in India are produced in the country so the Indian tariffs don't apply to them anyway. Companies are now coming back to America.
The shift in production is expected to take about 18 months.
"Trade wars are good, and easy to win", a confident President Trump tweeted in March, before escalating disputes with a number of countries, including US allies and major Asian economies. He's said the tariffs he's applying will realign trade imbalances that harm USA workers. USA motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession.
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Critics say it will further erode democracy in the North Atlantic Treaty Organisation member state and entrench one-man rule. A party must receive 10 percent of the votes for any of its candidates to win a seat at the legislature.
A motorcycle is seen at the Harley-Davidson Museum in Milwaukee on August 31, 2013.
Shares of Harley were down 1.7% to 43.45 before the open on the stock market today, as trade concerns had the Dow Jones industrial average, S&P 500 index and Nasdaq 100 futures all off to poor starts for the week. Daimler produces vehicles in the U.S. To avoid this cost, the country will shift to countries where there are lower or no tariffs.
"We are extremely anxious about the consequences of a trade war and are urging the White House to not advance with this plan", Ryan's spokeswoman, AshLee Strong has previously revealed.
"The damage is likely to have political consequences, as the retaliatory tariffs target industries in swing states".
On Monday, Mid-Continent Nail, the largest nail manufacturer in the United States, laid off 60 workers at a Missouri factory in what the Washington Post said were the first casualties of the trade war that Trump is waging against trading partners.
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China says will hit back if the latest tariff threats from Trump materialize, while India slaps retaliatory levies on U.S. goods. India and Turkey have already targeted USA products, ranging from rice to autos to sunscreen.