Harley-Davidson Swerves Amid Trump's Tariff War

From Forbes.com

Call Harley-Davidson one of the first major American companies to fall victim to President Trump’s tariff offensive. It probably won’t be the last. 

The iconic motorcycle manufacturer disclosed in an SEC filing Monday that it is moving production of motorcycles for the European market offshore because of the retaliatory tariffs imposed by the European Union after President Trump decided to tax imports of European steel and aluminum.

“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 U.S. To its international facilities to avoid the tariff burden,” the SEC filing said.

Charles Wallace , CONTRIBUTORI am a prize-winning financial journalist who covers trade issues  Opinions expressed by Forbes Contributors are their own.

Call Harley-Davidson one of the first major American companies to fall victim to President Trump’s tariff offensive. It probably won’t be the last.

The iconic motorcycle manufacturer disclosed in an SEC filing Monday that it is moving production of motorcycles for the European market offshore because of the retaliatory tariffs imposed by the European Union after President Trump decided to tax imports of European steel and aluminum.

“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 U.S. To its international facilities to avoid the tariff burden,” the SEC filing said.

 

It said the plan to shift manufacturing would take between 9 and 18 months and add incremental costs. The company currently makes motorcycles outside the U.S. at factories in India and Brazil.

Harley, which sold 40,000 bikes in Europe in 2017, said the cost of European duties this year would be around $30 million to $45 million. Rather than lose market share to rivals, it said it would not increase its prices in Europe to account for the taxes. On a full year basis, it expects the tariffs to cost $90 million-$100 million.

The European Union made clear it was targeting Harley because it is headquartered in Wisconsin, home of House Speaker Paul Ryan, in an apparent effort to put political pressure on Trump. But Ryan has since announced that he is not seeking another term.

The expanding trade war is motivating some other Republican politicians to seek legislation to rein in Trump’s ability to impose tariffs for national security reasons, requiring him to seek congressional consent.

A bill to do just that was introduced this month by Sen. Bob Corker, R-Tenn., and is winning support from Republicans whose constituents are being affected by the trade war.

Retaliatory tariffs, which have also been imposed by China, are hitting U.S. farm imports and raising the cost of raw materials for a wide range of manufacturers, such as John Deere, the farm machinery maker. Real estate developers have complained that new taxes on imported lumber from Canada are driving up home prices.

Ironically, Harley-Davidson convinced President Ronald Reagan in 1983 to impose heavy duties on imports of Japanese heavy motorcycles because they were cutting into Harley’s domestic sales.

From Forbes.com