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.
The EU began levying the new tariffs Friday on $3.4 billion worth of USA goods such as motorcycles, bourbon and peanut butter. The company operates manufacturing facilities in Brazil, India and Australia, and is beginning production in Thailand this year.
Ramping up output in worldwide plants for the European Union may take at least nine to 18 months.
European tariffs imposed as retaliation for President Donald Trump's taxes on imported steel and aluminum will add about $2,200 on average to the cost of every Harley-Davidson motorcycle exported to the continent, the company said Monday.
Trump has brushed aside those criticisms, vowing that the US has been taken advantage of so badly in the past that it can not lose a trade war.
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Harley-Davidson plans to move some of its motorcycle production outside the United States in response to retaliatory tariffs that include its products, Bloomberg reports. This year, domestic sales are flat, but foreign sales are up 12 percent, according to the The Wall Street Journal.
Harley-Davidson's stock, and the Dow Jones as a whole, dipped Monday morning as trade-war fears mounted. Earlier this year, Harley-Davidson announced it would consolidate its Kansas City, Missouri facility into its existing York, Pennsylvania one.
Harley-Davidson said it plans to bear increased costs to avoid a decrease in sales in the EU. Harley-Davidson said it stood to lose as much as $100 million a year.
The tariffs, which took effect Friday, are retaliation for taxes President Donald Trump imposed on European Union shipments of steel and aluminum.
In February 2017, Trump welcomed Harley-Davidson executives to Washington and viewed a number of the company's motorcycles on the White House South Lawn. 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.
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But then, unbidden, came the trade war.
United Steelworkers, a labor union representing some of the motorcycle maker's USA employees, said Monday that Harley-Davidson had long since begun to shift its manufacturing operations overseas.
On Monday, the vice president of the EU's governing body said that Europe and China will form a group aimed at updating global trade rules to address technology policy, government subsidies and other emerging complaints in a bid to preserve support for worldwide commerce. "Harley-Davidson expects ramping up production in worldwide plants will require incremental investment and could take at least nine to 18 months to be fully complete". Trump's tariffs also raise costs on imported parts they need to manufacture in the United States.
"This is further proof of the harm from unilateral tariffs", said AshLee Strong, a spokeswoman for House Speaker Paul Ryan, a Wisconsin Republican.
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