Harley-Davidson, Inc. (HOG) - Worthwhile stock

EU import tariffs force Harley to rethink

Tariffs Push Harley-Davidson to Produce Overseas

Donald Trump has criticised the Harley-Davidson motorcycle firm over its plans to shift production away from the USA in order to avoid European Union tariffs.

The company, which sold almost 40,000 motorcycles in Europe past year, said it planned to absorb those costs rather than pass them on to customers and risk damaging sales.

Harley-Davidson will begin to shift the production of motorcycles headed for Europe from the USA to factories overseas as it faces spiralling costs from tariffs.

He said the Alliance has reached out to Harley-Davidson with questions on whether plans to move 450 jobs here from Kansas City will be affected.

Harley-Davidson plans to shift the production of some of its bikes out of the U.S. in response to Europe's new tariffs on motorcycle imports.

In late April, Harley said Trump's metal tariffs would inflate its costs by an additional $15 million to $20 million this year on top of already rising raw material prices that it expected at the start of the year.

The company said that retaliatory European taxes on imported motorcycles will have a "significant impact" on its business, increasing the cost of motorcycles by $2,200 on average, so has made a decision to move production elsewhere. Moving production overseas, it said Monday, was "the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe".

Harley-Davidson opened plants in India and Brazil in recent years and is opening another in Thailand this year. "In 2017, almost 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the European Union countries is second only to the United States".

Mr. Trump first responded to the Harley announcement on Monday, saying he has fought hard for the 115-year-old company and was surprised by its plans, which he described as waving the "White Flag".

Over the next year and a half, the company wrote, it will move some of its production capacity to Europe to avoid tariffs on motorcycles it sells there. The company said in January that it would close its motorcycle plant in Kansas City, Missouri, in a cost-cutting move.

On Monday, the vice president of the European Union'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.

"People might think this is a smart economic move, but how many manufacturing plants are going to be moving over?" In March, the president tweeted that "trade wars are good, and easy to win".

"Harley-Davidson said, they wanted to do that (move some manufacturing base overseas)".

Apart from being an American brand, Harley-Davidson is also a favorite of Trump's. That was long before Tariffs were announced. Instead of raising the manufacturer's suggested retail price to cover the costs of retaliatory tariffs, Harley will eat the costs itself.

"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", Johnson said in a statement.

Renacci - the GOP U.S. Senate candidate against incumbent Democrat Sherrod Brown - is "an avid motorcyclist and former business owner of three Harley-Davidson dealerships", his congressional office says. The ugliness of the Harley Davidson spat has spilled over into a large dispute about the United States trade deficit with India, which, at $ 23 billion, is less than a tenth of Beijing's surplus with Washington. As of 10:15 AM, Harley-Davidson stock is down almost 2%.

"President Trump will continue to push for free, fair and reciprocal trade, in hopes that the European Union will join us", Huckabee Sanders said.

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