Harley-Davidson moving some production overseas; Donald Trump 'surprised'

Harley-Davidson to move production for some motorcycles out of US after EU tariffs

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Harley-Davidson says it plans to move production of motorcycles it sells in Europe overseas in response to growing trade friction between the United States and Europe.

Moving production overseas is expected to require nine to 18 months, so in the near-term Harley-Davidson will absorb the costs of European Union tariffs, the company said in a regulatory notice. The company operates manufacturing facilities in Brazil, India and Australia, and expects to start operating the new Thailand factory this year.

Harley-Davidson's stock dipped 6 percent on Monday as it became embroiled in a raging trade dispute between the US and Europe, which accounts for a significant amount of its sales.

The company said earlier in the day that it stands to lose as much as $100 million a year if it does not shift more of its manufacturing overseas. Those were applied last week in response to Trump's own tariffs on steel and aluminum. The total financial hit to the company will be in the range of $90 to $100 million per year, but the company said it would not pass those costs onto consumers in the form of higher prices. Analysts project the company will earn about US$587m this year on US$5b of revenue.

Harley's departure is particularly embarrassing for Trump since the president has repeatedly praised the company.

The new increased tariffs by the European Union come after the USA adopted its increased tariffs on steel and aluminium imports at the beginning of June, despite threats of reprisals from the EU.

President Trump, pushing a get-tough trade policy aimed at trade partners he says have taken advantage of the US for years, has cited Haley-Davidson as a company hurt by Europe's trade barriers. His next move may be to impose steep tariffs on German cars, which would constitute a serious escalation in an economic battle that is translating to real-world losses. The EU's trade chief said last week that it was "left with no other choice" after Mr. Trump imposed tariffs of 25 percent on steel imports and 10 percent on imported aluminum from the EU on June 1.

Ron Johnson, R-Wis., who represents Harley-Davidson's home state, said in a statement.

United Steelworkers, a labor union representing some of the motorcycle maker's U.S. employees, said Monday that Harley-Davidson had long since begun to shift its manufacturing operations overseas.

Harley's decline came amid broader market weakness that saw the Dow Jones Industrial Average fall almost 400 points or more than 1.5 percent.

"Beyond the immediate damage to American competitiveness, trade restrictions push high-technology firms to locate elsewhere in the future", the researchers wrote.

The company went on: "Harley-Davidson's objective is to fulfil dreams of personal freedom for customers who live in the European Union and across the world, and the company remains fully engaged with government officials in both the USA and the EU helping to find sustainable solutions to trade issues and rescind all tariffs that restrict free and fair trade". (16 percent of its global sales), it's moving production of its European Union fleet outside the USA, citing the new tariffs as its reasoning.

Trump hosted chief executive officer Matt Levatich and other Harley executives and union leaders for a White House listening session in February 2017 and hailed the motorcycle manufacturer as "a true American icon" and "one of the greats".

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