Harley-Davidson to build motorcycles destined for European Union outside of U.S.

Anna Jefferson
June 26, 2018

In a filing to their investors, Harley-Davidson have announced that they plan to shift production of some of the models out of the U.S. to avoid the new European Union import tariffs.

Harley Davison is based in Milwaukee, Wisconsin and employs 5,800 workers.

The EU implemented tariffs on just over $3 billion worth of United States goods in response to Trump's decision to hit steel and aluminum imports with tariffs.

The company made a decision to build the Thailand plant after Trump pulled out from the Trans-Pacific Partnership, which would have lowered import tariffs on its bikes in some of the fastest-growing motorcycle markets in Asia.

The Associated Press reports that while President Donald Trump is pointing to Harley as a prime example of an American business as those hurt by trade barriers, the bike maker has regularly warned against imposing tariffs.

White House trade and manufacturing adviser Peter Navarro said on Monday the administration wants Harley to make more motorcycles in the United States.

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Harley-Davidson plans to shift some manufacturing of its iconic motorcycles overseas to avoid retaliatory European tariffs imposed last week, the company said Monday. The company operates manufacturing facilities in Brazil, India and Australia, and expects to start operating the new Thailand factory this year. Harley-Davidson, the dominant player in the heavyweight USA motorcycle market said earlier on Monday it would not pass on any retail or wholesale price increases in the European Union and instead focus on shifting some U.S. production.

The EU is Harley's most important market outside of the US, accounting for 40,000 sales in 2017.

A US motorcycle sales slump has deepened since then, spurring Harley's decision in January to close a plant in Kansas City, Missouri, eliminating about 260 jobs.

Trump praised Harley-Davidson as an "American icon, one of the greats" and expressed confidence the company would expand USA manufacturing under his administration.

That's right Mark... the European Union imposed import duties of 25 percent on a range of American goods last week, including Harley-Davidson motorcycles.

"The company built its reputation and image by making motorcycles here, and if the company wants to continue to market itself as an iconic American brand both at home and overseas, it needs to focus on USA production", he added.

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More potential pitfalls for Harley-Davidson and other USA manufacturers could be on the way.

Harley Davison will shift production to worldwide facilities, saying the move will take nine to eighteen months. All three say they will be forced to close their plants unless they can get relief from the Trump administration's steel tariffs. In March, the president tweeted that "trade wars are good, and easy to win".

The problem with his criticism was that it didn't add up - and that U.S.jobs may now be moving to India and other parts of the world because of the trade disputes he has unleashed himself.

Europe is Harley-Davidson's second biggest market after the US.

But companies have warned that retaliatory tariffs could be devastating for business, or lead to higher prices for USA consumers.

On Monday, Mid-Continent Nail, the largest nail manufacturer in the United States, laid off 60 workers at a Missouri factory in what the Washington Post said were the first casualties of the trade war that Trump is waging against trading partners.

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