Harley-Davidson is shifting production out of America to avoid EU tariffs

Harley-DavidsonThe trade war between the US and Europe stepped up a gear last week, with the European Union announcing a range of tariffs on products manufactured in North America, including Harley-Davidson motorcycles.

These would, says iconic American firm, result in an incremental cost of around $2,200 (£1,650) per motorcycle – so, to avoid having to put up prices and lose market competitiveness, it has announced plans to move production out of the US to other worldwide facilities.

It perhaps isn’t the result US President Donald Trump wanted, but it’s one that has been forced upon Harley-Davidson. Last year, it sold almost 40,000 motorcycles in Europe, making the region its second most profitable sales channel (behind North America).

“Increasing international production to alleviate the EU tariff burden is not the company’s preference,” it said in an 8-K filing to the United States Securities and Exchange Commission, “but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe.”

The ramp-up of its international factories will take at least nine months, and could take up to 18 months – and the firm says the incremental cost for 2018 alone will be between $30 million to $45 million.

The full-year cost of the trade war tariffs to Harley-Davidson is estimated to be around £90 million to £100 million.

“Harley-Davidson’s purpose is to fulfil dreams of personal freedom for customers who live in the European Union and across the world,” it added. “The company remains fully engaged with government officials in both the US and the EU helping to find sustainable solutions to trade issues and rescind all tariffs that restrict free and fair trade.”

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