American motorcycle company Harvey-Davidson plans to bring production overseas in order to avoid EU tariffs. The iconic company becomes the latest organization to restructure operations during the ongoing global trade war. The aggressive approach the United States has taken regarding trade has strengthened the relationship between Europe and China.
Harley-Davidson said that the EU tariffs were scheduled to cost them $100 million a year. The tariff on motorcycles was raised from 6% to 31%. For Harley-Davidson, the export cost per bike is $2,200 more expensive.
Harley-Davidson issued the following statements:
“The tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region”
“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option”
On Monday, Harley-Davidson’s (HOG) stock fell 6.28 percent.
Trump’s aggressive 20 percent tariff on cars built in Europe brings with it market uncertainty.
Trump tweeted “Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse – be patient! #MAGA”.
Press secretary Sarah Sanders added that the EU is “attempting to punish US workers with unfair and discriminatory trade policies”.
Harley-Davidson’s main concern while making this decision was losing customers and decreasing sales. They were concerned that consumers would have to pay more and that they would not reach last year’s mark of 40,000 bikes sold in Europe last year.
This move by Harley-Davidson clearly shows the consequences American companies face in response to Trump’s tariffs on steel and aluminum imports. Trump loves things that are “made in America” yet forces production abroad. Harley becomes the first to go abroad, will others?
Featured Image via Pixabay