Harley Will Shift Production Overseas To Avoid European Retaliatory Tariffs

By Sahid Fawaz

As its stock falls, in part due to EU retaliatory tariffs, Harley-Davidson says it will send more jobs overseas.

MarketWatch reports:

“Shares of Harley-Davidson Inc. HOG, -3.03% sank 2.7% in premarket trade Monday, after the motorcycle maker said the European Union tariffs on the company’s motorcycles increased to 31% from 6%, and will increase the cost of the average motorcycle to the EU from the U.S. by about $2,200.

The company said it won’t raise its suggested retail prices or wholesale prices to dealers to cover the costs of the tariffs, because it believes passing on the tariff costs would have an “immediate and lasting detrimental impact” to its business in the region. Harley-Davidson expects the tariffs to cost about $30 million to $45 million for the rest of 2018, and could cost $90 million to $100 million on an annual basis.

The company said it plans to shift production of EU-bound motorcycles to international facilities from U.S. facilities to avoid the tariff burden. That plan would involve increased investment and could take at least nine to 18 months to complete.

The EU tariffs, effective June 22, were imposed in response to tariffs the U.S. imposed on steel and aluminum imports from the EU. Harley-Davidson’s stock had dropped 13% year to date through Friday, while the S&P 500SPX, -1.20% had gained 3%.”

 

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