Harley-Davidson moving some production overseas after retaliatory tariffs
26 June, 2018, 03:45 | Author: Martin Tyler
According to the company, the EU's new tariffs will increase the cost of a motorcycle shipped from the United States to Europe by $2,200.
The European Union began rolling out tariffs on American imports like bourbon, peanut butter and orange juice last week.
Harley-Davidson said that shifting targeted production from the United States to global facilities could take up to 18 months to be completed.
Production of Harley-Davidson motorcycles sold in Europe will move from US factories to facilities overseas, the Milwaukee-based company announced Monday, a effect of the retaliatory tariffs the European Union is imposing on American exports in an escalating trade war with the Trump administration.
Harley-Davidson is moving some of its production outside of the United States to avoid the impact of steep new European Union tariffs targeting American-made motorcycles.
Analysts at Baird Equity Research cut its 2018 profit estimates for Harley-Davidson to $3.70 per share from $3.90 and now expect 2019 profit of $3.85, down from $4.20.
In January, it said it would consolidate its Kansas City, Missouri, plant into its York, Pennsylvania, facility.
"A company that is as connected to America, and Americana, as Harley is probably going to be laying off USA workers in favour of foreign workers and going to be losing money as a result of this", James Hardiman, an equity analyst with Wedbush Securities, said of the trade battle between the USA and the EU.
In February, Harley-Davidson announced the recall of 251,000 motorcycles due to possible brake failures, a move estimated to have cost the company $25 million.
The Trump administration has started fights with trading partners around the world, imposing tariffs on imported steel and aluminum, provoking retaliation from close USA allies including the European Union, Canada, Mexico and Turkey.
The move is among the first signs that Trump's use of tariffs, which he has promoted as a way to boost employment in the steel and aluminum industries, is hurting other American businesses. 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.
Powersports companies in general are vulnerable to the "dangerous game of chicken being played by the Trump administration and foreign trade officials", said a note earlier this month by Wedbush Securites analyst James Hardiman.
Harley-Davidson Inc.'s headquarters in Milwaukee.
Additionally, retaliatory tariffs from the EU, Canada, Mexico, and more make it expensive to get finished goods into those markets.
The E.U. had specifically targeted Harley, as well as other familiar American brands like Jack Daniel's, to extract maximum punishment after Trump hit the bloc with the steel and aluminum penalties.
While the company said that it expects it will take "9 to 18 months" to increase production at its facilities overseas, the move is already drawing the ire of tariff critics, including members of the president's own party.
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