US trade policy drives Harley Davidson to create EU jobs
26 June, 2018, 13:49
The EU imposed retaliatory tariffs last week on $3.4 billion worth of US products like bourbon, motorcycles and orange juice.The new duties are in direct response to President Trump's decision to increase fees on aluminium and steel coming from Europe.
Milwaukee-based Harley-Davidson Inc. will shift production of motorcycles for Europe to its global facilities to avoid up to $100 million annually in costs from tariffs applied by the European Union. Setting up production facilities overseas will take between nine and 18 months, the company said.
Harley-Davidson Inc. sold nearly 40,000 motorcycles in Europe a year ago, generating revenue second only to the USA, according to the Milwaukee company.
The shares dropped 2.7 percent to $43 in early United States trading.
Daimler, which also produces its premium Mercedes cars in the USA, said its 2018 profits were expected to be hit by higher Chinese tariffs on imports of American-made cars.
"If Trump's trade policies are leading an iconic company like Harley-Davidson to move production out of the United States, then who exactly is benefiting?"
European Commission Vice President Jyrki Katainen said unilateral action by Trump in disputes over steel, China's technology policy and other issues highlighted the need to modernize the World Trade Organization to reflect developments in the world economy.
President Trump had previously thanked Harley-Davidson for staying in America, while criticizing other firms for moving production outside the U.S.
Asked earlier Monday about the news at the day's press briefing and whether such tariff imposition would continue, White House press secretary Sarah Sanders claimed that Trump's "trade and economic policies have been a huge benefit to the American economy" and placed the blame on the European Union, arguing that it was "trying to punish USA workers because they have engaged repeatedly in unfair trade practices".
Harley plans to absorb much of the cost increase tied to the EU's tariffs because passing it on to dealers or customers would make an "immediate and lasting detrimental impact" on its business, it said in the filing.
Rows of motorcycles are behind a bronze plate with corporate information on the showroom floor at a Harley-Davidson dealership in Glenshaw, Pennsylvania, April 26, 2017. These tariffs, which became effective June 22, 2018, were imposed in response to the tariffs the USA imposed on steel and aluminum exported from the European Union to the U.S.
Harley-Davidson determined that the tariffs would therefore eat up $30 million to $45 million of the current year's profit.
The Dow fell by more than 300 points on Monday amid growing worries about trade.
Trump hosted chief executive Matt Levatich and other Harley executives and union leaders for a White House listening session in February 2017 and hailed the motorcycle maker as "a true American icon" and "one of the greats". AshLee Strong says the best way to help American workers, consumers and manufacturers is to open new markets and not raise barriers.
The company chose to build the Thailand plant in response to Trump's decision to pull out from the Trans-Pacific Partnership which would have lowered import tariffs on its bikes in some of the fastest-growing motorcycle markets in Asia.
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Harley Davidson to begin moving some production overseas
It is not clear where Harley-Davidson will boost production but the impact on jobs in the United States could be severe. European Union tariffs on its motorcycles exported from the USA have surged from 6 percent to 31 percent.
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