Harley-Davidson moving some production overseas after retaliatory tariffs

Harley-Davidson to shift some production out of US over EU tariffs

President Donald Trump sharply criticized American motorbike manufacturer Harley-Davidson's decision today to shift some of its production overseas, a move the company said it is making in order to avoid the president's tariffs.

Harley said in a Monday filing that European Union tariffs on its motorcycles built in the USA just jumped from 6% to 31%, adding roughly $2,200 to the cost of each.

Harley-Davidson Inc. sold nearly 40,000 motorcycles in the European Union a year ago, its second-largest market after the United States, according to the company. Besides its USA plants, Harley-Davidson maintains manufacturing facilities in Australia, Brazil, India and Thailand, according to its website.

Harley-Davidson said the EU's new tariffs on US-made motorcycles would drive up costs and force the company to shift a sizable portion to its production outside of the U.S. to avoid the tariff.

Last week, the European Commission said it would start charging import duties of 25 percent on a range of USA products after Washington imposed tariffs on EU steel and aluminum at the start of June.

Harley-Davidson announced its intentions in regulatory filings posted to the company's website on Monday, June 25. That increases the costs for companies to bring the parts they need into the USA to complete their products.

President Trump had previously thanked Harley-Davidson for staying in America, while criticizing other firms for moving production outside the U.S.

Tech entrepreneurs are also concerned that the tariffs make it harder to invent the kinds of new products that drive US innovation. "We are hopeful the USA and European Union governments will continue to work together to reach an agreement on trade issues and rescind these tariffs".

"Unfortunately, this confirms my concerns and is a far too predictable outcome of policies that give companies like Harley-Davidson incentives to make their products elsewhere". Since then, he's increased tariffs on the EU, Mexico, Canada and China, and promised additional fees in response to any retaliation. The Motorcycle maker announced that it would move production for European customers overseas to avoid retaliatory tariffs that could cost it up to $100 million per year.

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Harley's move is an example of what economists say will be a significant long-term problem with the tariffs and represents a black eye for Trump's arguments in favor of the measures. Wisconsin is the home of Harley Davidson.

After early steep declines, markets pared losses after White House trade adviser Peter Navarro softened the country's stance on investment restrictions.

In the wake of the sluggish USA sales, Harley-Davidson announced in January it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania.

The company will ramp up production in India, Brazil and Thailand.

The new worldwide production facilities could take at least nine to 18 months to be completed. Other products targeted include peanut butter, orange juice, bourbon, blue jeans, and cigarettes.

Follow Harley-Davidson's stock price in real-time here.

Earlier this year, Trump imposed unilateral tariffs on steel and aluminum imports. But he says the ultimate goal is the removal of all tariffs so "we don't have this tit for tat on any number of products out there".

Harley-Davidson sold 39,773 motorcycles in Europe in 2017, it said in its annual report.

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