Harley-Davidson will outsource some production due to retaliatory tariffs

Jun 26, 2018, 03:47

A business like Harley-Davidson gets hit at both ends, as American tariffs on steel and aluminum imports drive up the cost of raw materials used to build motorcycles and retaliatory European Union tariffs make it more hard to sell their products.

This news comes less than a week after the European Union retaliated to the Trump administration by imposing tariffs on American imports such as motorcycles, orange juice, bourbon, boats, cigarettes and denim products to the tune of $3.4 billion.

The company did not say where production would be shifted, or how many jobs might be affected, but said the move would take nine to 18 months to complete.

Harley-Davidson, the USA motorcycle manufacturer, said Monday that it was shifting some of the production of its bikes outside the United States to avoid European Union tariffs imposed as part of a widening trade dispute.

Trump on Friday further threatened to escalate a trade war with Europe by imposing a 20 percent tariff on all us imports of EU-assembled cars.

Yet another classic US brand is waking up from the American Dream. A year after Trump pulled the U.S. out of a 12-nation trade deal, the Trans-Pacific Partnership, in January 2017, Harley announced it would close its factory in Kansas City, Missouri, and consolidate production in York, Pennsylvania, eliminating about 260 jobs. By driving up the company's costs, Trump's tariffs are making it almost impossible for the 500-worker company to compete with cheap nails from China, Skarich said.

"We are now assessing the potential impact on our USA facilities", said Harley-Davidson spokesman Michael Pflughoeft. Harleys were among the select USA exports the European Union chose to slap tariffs on earlier this month, after the Trump administration implemented tariffs on aluminum and steel. All three say they will be forced to close their plants unless they can get relief from the Trump administration's steel tariffs.

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. Sales of the company's bikes have already been stung in recent years, with the initial bite of the recession followed by a general downturn in interest from Millennial riders.

It's not like Harley-Davidson only manufactures its products in the U.S. right now, though.

But then, unbidden, came the trade war. "Europe is a critical market for Harley-Davidson".

The company has assembly plants in the United States, India and Brazil, and will open a new plant in Thailand in the summer.

Already, Harley had announced plans to close a factory in Missouri and build one in Thailand, after Trump pulled the United States out of the Trans-Pacific Partnership, the free-trade agreement with a bloc of Asian countries including New Zealand that would have lowered barriers to key markets.

The Trump administration's tariffs have tended to target raw materials like steel or aluminum, or building block materials like solar modules.

The tariffs will hit home for House Speaker Paul Ryan.