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Harley-Davidson To Move Some Production Outside US Over EU Tariffs

Courtesy of ZeroHedge. View original post here.

President Trump last year praised iconic US motorcycle maker Harley Davidson for its U.S. manufacturing presence and blamed global tariffs for making it “very hard” for the company to do business overseas. Well, in an ironic twist he was right, because on Monday Harley-Davidson announced that it will move the production of motorcycles bound for European countries out of the United States, citing rising costs from European Union tariffs on their products.

The decision comes at a time when Harley's Europen sales are at their highest relative percentage of total sales since 2011.

In an 8K filing on Monday, HOG said that the EU tariffs on motorcycles exported from the U.S. rose from 6% to 31%, which "will result in an incremental cost of approximately $2,200 per average motorcycle exported from the U.S. to the EU." That’s expected to add up to a burden of $90 million to $100 million annually, which Harley-Davidson will absorb rather than pass extra costs on to customers due to "an immediate and lasting detrimental impact to its business in the region."

As a result, motorcycles bound for European countries will now be produced in overseas factories. Harley also said that it’s planning to increase production in international plants over the next 18 months.

In the filing, Harley apologetically explains that "increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe."

And while HOG says it remains committed to making motorcycles in the U.S., it has no other choice in a market where it sold almost 40,000 bikes last year. Besides its U.S. plants, Harley-Davidson maintains manufacturing facilities in Australia, Brazil, India and Thailand, according to Bloomberg.

Earlier in the month, the EU announced earlier that it would impose retaliatory tariffs on a range of U.S. goods in July, including motorcycles. The measures came in response to Trump’s steep tariffs on imported aluminum and steel from the EU and other key U.S. allies, including Canada and Mexico.

The text of the 8K is below:

 


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