Once referred by Donald Trump as a shining example of “what is going right in America”, Harley-Davidson has confirmed that it is moving some of its manufacturing units out of the US to escape the European tariffs that had been imposed by the US administration under the much-talked trade war; tables have turned and Harley-Davidson seems to be showing “what actually is going wrong in the US”.
Iconic US motorcycle company Harley-Davidson announced on Monday that they are shifting more of their production units abroad and to Europe to escape the heavy tariffs that are being imposed on steel and aluminium, as well as the escalated tariffs on bikes that are exported from the US to European nations. After US President Donald Trump’s trade war, new tariffs were imposed, which rocketed EU’s tariffs to 31% from the current 6%. With the new tariff rates, the cost of a single premium Harley-Davidson motorcycle that is shipped from the US to Europe will be increased by $2200 – pressing the American company to shift a sizeable portion to its production to Europe.
Announcing the shifting plans, the management at Harley said that “expanding international production to alleviate the EU tariff burden is not the company’s preference”, but there are little choices to make their bikes more accessible to their valued mass of customers in countries beyond the States. Harley’s share value in Wall Street has dropped by 6% – the biggest fall in past five months and the stocks fell down by 18% this year; and the company can no longer afford to lose its second-biggest market in the world – Europe. Shifting production overseas will take Harley around 9 to 18 months – which means until then, the company will require to eat up the EU tariffs instead of passing them to dealers or customers as it would make an “immediate and lasting detrimental impact” on its business; and the absorption of tariffs will cost $90 million to $100 million, annually.
Reacting to the decision made by his “favourite” Harley-Davidson, Trump said that he was “surprised” as he did not expect “Harley-Davidson, of all companies, would be the first to wave the White Flag”. Perhaps the white flags from Harley demonstrates how “America First” may have backfired and ended up with a loss of hundreds of manufacturing jobs to the United States. Also, shifting overseas makes sense to Harley-Davidson as its sales had fell down by 12 percent in the United States in last quarter, but it rose nearly seven percent in the European/Middle East/Africa region. Once touted to be the “American icon that is a great company”, is the company that is now encapsulate a lot of what is going wrong.