Rising tariffs forces Harley-Davidson to shift some production overseas


White House Chief of Staff Reince Priebus and Vice President Mike Pence look on as President Donald Trump speaks briefly to reporters after greeting Harley Davidson executives on the South Lawn of the White House, February 2, 2017 in Washington, DC. If they move, watch, it will be the beginning of the end - they surrendered, they quit!.

Mr Trump tweeted that Harley-Davidson had already announced it was closing a Kansas City plant and moving those jobs to Thailand.

The company said that it was making the move in response to tariffs from the European Union.

Harley executives later traveled to Washington for a meeting with Trump, who said they told him of the difficulty they faced selling motorcycles overseas. The measure came in response to new U.S. duties of 25 percent on steel and 10 percent on aluminum imposed by the Trump administration. Harley plans to address the tariff burden by shifting production of motorcycles for European Union destinations from the U.S.to its global facilities. Shifting production to its non-U.S. plants will require additional investment overseas and is expected to take nine to 18 months, Harley said.

The company said that retaliatory European taxes on imported motorcycles will have a "significant impact" on its business, increasing the cost of motorcycles by $2,200 on average, so has chose to move production elsewhere. It anticipates the cost for the rest of the year to be approximately 30 million dollars (£22 million) to 45 million dollars (£40 million).

Trump on Tuesday criticized the company's decision in a series of comments on Twitter that contended the company already planned to move jobs overseas and was using the tariffs as a pretext.

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In 2017, almost 40,000 riders bought a Harley-Davidson motorcycle in Europe, accounting for more than 16% of the company's sales past year. With sales stalling in the U.S., Harley-Davidson is increasingly relying on Europe and other overseas markets for growth, Wedbush's Hardiman said. The plant in Kansas City that Trump wrongly said would see its work shifted there actually is being closed as part of a reshuffling that will move production to York, Pa. Does Harley even understand what 'Made in America means?'

"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 U.S. production", he added.

In response to Trump's tariffs, Europeans are targeting the most iconic American products, such as motorcycles, blue jeans, and bourbon.

PRESIDENT DONALD TRUMP: In fact, they proudly displayed five of their magnificent motorcycles made in the United States of America on the front lawn of the White House. He didn't mention President Trump by name but said tariffs are "basically taxes". And on Monday, the company said it plans to move some of its operations overseas. Shows how unbalanced & unfair trade is...

Harley-Davidson's troubles just don't seem to end. Daimler last week said the tariff escalation will crimp its earnings.

"We are finishing our study of Tariffs on cars from the E.U.in that they have long taken advantage of the U.S.in the form of Trade Barriers and Tariffs". They would also get a huge break on tariffs when exported to Thailand's neighbours, thanks to a trade deal among the 10 Asean members. Alden said. "This will pose a real challenge to the president's core claim that his policies will lead companies to build more things in the U.S". Harley-Davidson and its European Union consumers, however, are still winners.