Harley workers are first casualties in trade war

Harley-Davidson to move production for some motorcycles out of US after EU tariffs

Harley-Davidson to move production for some motorcycles out of US after EU tariffs

To help mitigate some of the costs, the company also said it "will be implementing a plan to shift production of motorcycles for European Union destinations from the U.S. to global facilities".

This news comes less than a week after the European Union retaliated to the Trump administration by imposing tariffs on American imports such as motorcycles, orange juice, bourbon, boats, cigarettes and denim products to the tune of $3.4 billion.

Wisconsin-based Harley-Davidson has assembly plants in Australia, Brazil, India and Thailand. Setting up production facilities overseas will take between nine and 18 months, the company said.

Harley said it plans to shift production of motorcycles for European Union destinations from the United States to its worldwide facilities to avoid the tariff burden.

US President Donald Trump has repeatedly used the company as an example of how European import tariffs hurt US producers. The President's beloved stock market took another header Monday on news of more restrictions on investment into the US, and the Dow Jones Industrial Average is now down for 2018.

Struggling to overcome a slump in U.S. demand, Harley has been aiming to boost sales of its iconic motorcycles overseas to 50% of total annual volume from about 43% now. This year, domestic sales are flat, but foreign sales are up 12 percent, according to the The Wall Street Journal. Harley-Davidson shares sank more than 5 per cent in morning trading on Monday, its worst day in months.

In the wake of the sluggish USA sales, Harley-Davidson announced in January it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania.

Lovely said Harley and other companies face retaliatory tariffs in Europe and elsewhere if they try to export products. Harley-Davidson said it stood to lose as much as $100 million a year.

The EU targeted the USA vehicles as part of its rebuttal to Trump's tariffs on imported aluminum and steel, one aspect of his multi-front trade war.

Harley has warned consistently against tariffs, saying they would negatively impact sales.

The company is already struggling with falling sales.

President Donald Trump arrives to meet with Harley Davidson executives and union representatives on the South Lawn of the White House in Washington, D.C., February 2, 2017. The E.U. tariffs will add $2,200 to the cost of an average motorcycle, threatening "an immediate and lasting detrimental impact to its business", the company said Monday in filing with the Securities and Exchange Commission.

Mary Lovely, a senior fellow at the Peterson Institute for International Economics, and Yang Liang, a graduate associate at the Moynihan Institute of Global Affairs, highlighted the possibility that companies will abandon the USA in a recent policy paper.

Already, Harley had announced plans to close a factory in Missouri and build one in Thailand, after Trump pulled the USA out of the Trans-Pacific Partnership, the free-trade agreement with a bloc of Asian countries including New Zealand that would have lowered barriers to key markets. And many of Trump's tariffs focus on intermediary goods, or parts, that are then incorporated into finished products. "The best way to help American workers, consumers, and manufacturers is to open new markets for them, not to raise barriers to our own market".

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