Trump blasts Harley plan to shift US production
U.S. President Donald Trump on June 25 slammed Harley-Davidson Inc after the motorcycle maker said it would move production for European customers overseas to avoid retaliatory tariffs that could cost it up to $100 million per year.
Trump said he has fought hard for the company and was surprised by its plans, which he described as waving the “White Flag.”
Harley-Davidson, the dominant player in the heavyweight U.S. motorcycle market said earlier on June 25 it would not pass on any retail or wholesale price increases in the EU and instead focus on shifting some U.S. production.
Harley shares closed down nearly 6 percent and analysts cut their profit forecasts on concerns about how quickly the company would be able to adapt to the 25 percent import duties the European Union began charging on June 22.
“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 in a post on Twitter.
The United States earlier this month imposed tariffs on steel and aluminum imports from the European Union, provoking a “tit-for-tat” response from the trading bloc against U.S. goods.
In a regulatory filing, the 115-year-old Milwaukee, Wisconsin-based company said the retaliatory duties would result in an incremental cost of about $2,200 per average motorcycle exported from the United States to the European Union, but did not provide more details on current motorcycle costs.
Harley’s entry-level bike in France currently costs 7,490 euros ($8,766).
The company said it expects the tariffs to result in incremental costs of $30 million to $45 million for the rest of 2018 and $80 million to $100 million on a full-year basis.
“We think Harley’s decision to protect EU demand is wise for the long-term health of the market,” Baird Equity Research said in a note.
“But we expect the near-term impact to weigh on estimates and sentiment until a clearer path to mitigation is outlined.”
Trump vowed to make the iconic motorcycle maker great again when he took office last year. But since then the company has been counting the costs of his trade policies.
In late April, Harley said Trump’s metal tariffs would inflate its costs by $15 million to $20 million this year on top of already rising raw material prices that it expected at the start of the year.
White House trade and manufacturing adviser Peter Navarro said on Monday the administration wants Harley to make more motorcycles in the United States.