On June 25, iconic motorcycle maker Harley-Davidson said, in a filing with the Securities and Exchange Commission, it was moving production of motorcycles for EU customers out of the US as a result of escalating trade tensions.
The company said new tariffs on US-made motorcycles going into the EU… would result in an additional average cost of $2,200 per motorcycle
The company said new tariffs on US-made motorcycles going into the EU, which increased from six percent to 31 percent on June 22, would result in an additional average cost of $2,200 (€1,890) per motorcycle.
Rather than pass the cost on to dealers and consumers, Harley-Davidson will absorb the cost of the tariffs, and it estimates the financial burden will amount to between $30m (€25m) and $45m (€39m) for the remainder of 2018, with full year estimates standing at between $90m (€77m) and $100m (€86m).
President Donald Trump responded to the announcement on Twitter, saying: “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 to the EU, which has hurt us badly on trade, down $151bn [€129bn]. Taxes just a Harley excuse – be patient!”
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
— Donald J. Trump (@realDonaldTrump) June 25, 2018
Harley-Davidson sold just fewer than 40,000 motorcycles to European customers in 2017, making the EU its second largest market after the US.
The company, which has manufacturing facilities in Australia, Brazil, India and Thailand, said ramping up production in its international locations is the only way to keep its European business viable, and that the process would take between nine and 18 months.
The EU slapped tariffs on around $3.2bn (€2.7bn) of US imports into the bloc in response to the tariffs the US has placed on EU steel and aluminium – 10 percent and 25 percent, respectively.
The EU’s retaliation seems strategic as it is targeting products relevant to the US political system. Harley-Davidson is headquartered in Wisconsin, the home state of Paul Ryan, Speaker of the House of Representatives.
Bourbon, also subject to tariffs, comes from Kentucky, the home state of Senate majority leader Mitch McConnell, and orange juice is a major export of Florida, an important swing state in US elections.