Trump Tariffs Backfire With Harley-Davidson Move

The iconic bike manufacturer says shifting some production overseas is its only option after the EU retaliiated against U.S. tariffs.
Matthew HellerJune 25, 2018

Harley-Davidson said Monday it would shift some production of its iconic bikes overseas to avoid retaliatory European Union tariffs that it said threaten the viability of its business in Europe.

The company — which President Donald Trump last year hailed as a “true American icon” — said the EU tariffs imposed last week in response to Trump’s trade moves would add about $2,200, on average, to the price of every motorcycle it exported from the U.S. to Europe, its second most important market.

“Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally,” it said in a regulatory filing. “Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe.”

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“Europe is a critical market for Harley-Davidson,” the company added, noting that in 2017, it sold nearly 40,000 bikes in the region.

The EU tariffs apply to $3.2 billion worth of American products, including bourbon, orange juice, playing cards and Harley-Davidsons. They followed Trump’s decision to impose duties on European steel and aluminum, which he said were necessary to protect U.S. jobs.

“While Mr. Trump says his trade policy is aimed at reviving domestic manufacturing, Harley-Davidson’s decision shows how the administration’s moves could have the unintended effect of reducing employment and economic growth in the United States,” The New York Times said.

Outside the U.S., Harley-Davidson operates factories in countries such as Brazil, India, Australia, and Thailand. It said it expects ramping-up overseas production “will require incremental investment and could take at least 9 to 18 months to be fully complete. “

Chad Bown, a senior fellow at the Peterson Institute for International Economics, said he expected more companies to follow Harley-Davidson’s lead.

“This is incredibly self-defeating,” he told the Times. “There may be some increased domestic production of aluminum and steel because of the tariffs, but now there is going to be less motorcycle production in the United States for exports.”