Harley-Davidson To Move Some Of Its Production From USA

The decision was taken due to retaliatory tariffs imposed by the European Union

In a surprising turn of events, Harley-Davidson USA has announced that it'll be moving some part of its production overseas. According to the company, this decision was solely taken to avoid retaliatory European tariffs imposed by the European Union as a response against the United States’ increased tariff on steel and aluminium. As per HD, the retaliatory tariff hike by the European Union from 6 per cent to 31 per cent will incur an increased average cost of USD 2,200 on motorcycles exported from the US to Europe. This announcement also triggered a mass sell-off on Wall Street, with Harley's shares falling by nearly 6 per cent (USD 41.37 per share).

American president Donald Trump, who praised Harley for "building things in America" earlier, stated he was "surprised" by the manufacturer's decision.

"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!" Trump said on Twitter.

In an official statement the company stated, "To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the US to its international facilities to avoid the tariff burden."

This isn't surprising considering the bikemaker sold close to 40,000 units in the European Union alone in 2017, generating revenue second only to that of the United States. According to reports, EU tariffs have caused the company's profits to plummet by 5 to 8 per cent. Taking this calculation, a year's impact can end up costing USD 90 to 100 million dollars, which is approximately 15 per cent of the company's annual profits!

Harley-Davidson has stated that it could take at least 9 to 18 months to shift the targeted production facilities from the US. However, the company hasn't mentioned as to which country it plans to move its production facilities to. Outside the US, Harley has manufacturing facilities in India, Brazil and Australia. The company has been struggling with sales in recent times. It had to close its plant in Wisconsin recently and is in the process of setting up a new one in Thailand.