Harley-Davidson to make motorcycles in Europe to avoid trade-war tariffs

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

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"The Aura will be gone and they will be taxed like never before", U.S. President Donald Trump tweeted after Harley-Davidson said it would shift some production overseas. "Their employees and customers are already very angry at them", he wrote on Twitter.

But Trump appears to believe Harley-Davidson will manufacture products for the US market overseas, which it so far has not indicated it plans to do with this move.

Harley-Davidson Inc. sold nearly 40,000 motorcycles in Europe a year ago, generating revenue second only to the US, according to the Milwaukee company.

If it continues, Harley estimate the tariffs will cost them $90 - 100 million (£67 - 75 million) a year, which is approximately one third of their entire operating profit. Remember, this was in early May and long before the new European Union tariffs were announced, which is the main reason H-D is citing for shifting more production overseas.

On Monday, the Wisconsin-based motorcycle maker filed documents at the Securities and Exchange Commission that indicated it will shift production of the motorcycles it sells in the European Union to global facilities to avoid tariffs the EU imposed to in response to Trump's tariffs on its steel and aluminum.

"EU tariffs on Harley-Davidson motorcycles exported from the U.S. have increased from 6 percent to 31 percent", Harley-Davidson said in its filing with the U.S. Securities and Exchange Commission.

He also said he had "chided" Harley-Davidson about tariffs in India and many companies were returning to the United States.

The US president tweeted he was surprised that the company had become "the first to wave the white flag", adding: "I fought hard for them".

"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 United States production", he added.

Harley-Davidson announced in January it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania. Its German rival BMW said it was considering "possible strategic options" in view of the rising trade tensions between China and the United States. Harley-Davidson has denied a link between Kansas City and Thailand. Holtz-Eakin said those tariffs hurt steel-using manufacturers - which employ many times more people than steelmakers do - hurt the economy generally and ultimately were ruled illegal by the World Trade Organization.

The plant relocation is expected to take nine to 18 months to complete.

"I expect many other companies will be forced reluctantly to move production as Harley has done in order to maintain their viability", Edward Alden, a senior fellow at the Council on Foreign Relations, told Business Insider. If Harley Davidson switches production elsewhere, the European Union taxes hurt the U.S. economy, but do not hurt Harley Davidson, and do not hurt the European Union consumer. That was long before Tariffs were announced.

While Harley says it has a goal of creating 2 million new riders in the U.S.by 2027, it's also banking on boosting its worldwide business to 50 percent of its annual sales volume, compared with 39 percent past year.

Wisconsin-based Harley-Davidson said the increased costs from the European Union tariffs were a "substantial" burden and a threat to its worldwide sales, which it has been trying to expand. Europe is a critical market for Harley-Davidson. Trump said in a series of tweets Tuesday morning.

Asked about the Harley decision Monday, Wisconsin Gov. Scott Walker addressed the issue of tariffs in general but not specifically the situation faced by the company.

"Unfortunately, this confirms my concerns and is a far too predictable outcome of policies that give companies like Harley-Davidson incentives to make their products elsewhere", Johnson said in a statement.

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