Victim of the trade war launched by Donald Trump, the emblematic manufacturer of American motorcycles Harley Davidson announced Monday relocate part of its production to escape the customs tariffs introduced by Brussels in retaliation to those of Washington.
The well-known motorcycle brand, launched 115 years ago, lamented that European customs taxes went from 6% to 31% on its products entering the European market, which raises the retail price of each vehicle by $2200.
Since June 22, Brussels has hit a series of typically US products tariffs of 25%, retaliatory measures after the taxes imposed by the Trump administration on steel (25%) and aluminum (10%) European. Thus the famous motorcycles, but also the jeans, the bourbon and the peanut butter are in the sights of Brussels.
Some of these products appear to be cleverly targeted by the EU because they are manufactured in states politically close to Donald Trump. This is the case of Harley-Davidson headquartered in Milwaukee, the state of Paul Ryan, the Republican leader in the House of Representatives.
“This is new proof of the damage caused by the unilateral application of taxes. The best way to help US workers and manufacturers is to open new markets for them, not to impose new barriers on their own markets,” Ryan said.
Donald Trump reacted in a tweet saying “surprised” that, “of all American companies”, Harley-Davidson who is “the first to wave the white flag.”
“I fought hard for them and in the end they will not pay customs duties to Europe […] Customs taxes are just a pretext. Be patient,”s aid the president.
Harley-Davidson, which does not want to pass on the increase in tariffs to its customers at the risk of plunging its European sales and “threaten the viability of dealers” has announced that it would move some of its production.
Motorcycles for export will now be manufactured in its international factories outside the US territory.
The group, which sells some 40,000 motorcycles a year in Europe – its second largest market after the United States – did not specify in which factories it would transfer its production or whether it would lead to job cuts on the ground. American. Harley-Davidson has factories in Brazil, India, Australia and one under construction in Thailand.
The company expects that the immediate cost of the tariffs and the investments related to the transfer of production will affect the accounts of the company by 30 to 45 million dollars by the end of 2018. For a full year, the cost will be between $ 90 million and $ 100 million.
Not only is the manufacturer affected by the taxes on its motorcycles, but the rights that affect the steel trade also increase the cost of this raw material, had already warned in April the financial director of the group.
If the legendary motorcycle brand appears as a collateral victim of the trade confrontation launched by Donald Trump, the slowing of its sales is not new. They suffer from an aging customer base and competition from Japanese vehicles.
The group relies heavily on its exports to keep its production afloat while overall sales were down 6.7% last year, including 8.5% for the United States alone, its main market.
In 2017, Harley-Davidson sold 242,788 motorcycles worldwide, up from 260,289 the previous year, and plans to sell only 231,000 to 236,000 this year.
In the first quarter, sales plummeted 12% in the United States alone, while they advanced 7% in the European, Middle East and Africa markets.
The company has already announced earlier this year the closure of a site in Kansas City, Missouri, and a restructuring of its York, Pennsylvania unit.
The new transfer of its production abroad should take 9 to 18 months.
Ironically, Harley-Davidson was one of the first manufacturing groups to visit the White House in February 2017 to illustrate President Trump’s “America First” industrial strategy.
The president praised “this American flagship” and expressed confidence that the company would increase its industrial capacity in the United States.