Published: Mon, June 25, 2018
Money | By Ralph Mccoy

U.S. trade policy drives Harley Davidson to create European Union jobs

U.S. trade policy drives Harley Davidson to create European Union jobs

Harley-Davidson expects ramping-up production in global plants will require investment and will take at least 9 to 18 months to be fully complete. The EU tariffs on $3.4 billion worth of USA products are retaliation for duties the Trump administration is imposing on European steel and aluminum.

The company said the European Union retaliatory tariffs of 25 percent would mean a motorbike shipped from the U.S to Europe would now face a tariff of 31 percent, up from 6 percent, leading to an average cost increase of $2,200 per motorcycle.

"To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for European Union destinations from the its worldwide facilities to avoid the tariff burden", the company said in an official announcement.

It is not clear where Harley-Davidson will boost production but the impact on jobs in the United States could be severe.

The company said: "Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally".

The price of motorcycles will not go up in response to the tariffs, the company said.

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Motorcycles bound for European countries will now be produced in overseas factories. Europe is a critical market for Harley-Davidson.

European Commission Vice-President Jyrki Katainen said unilateral action by U.S. President Donald Trump in disputes over steel, China's technology policy and other issues highlighted the need to modernize the World Trade Organization to reflect developments in the world economy.

Harley-Davidson said tariffs would reduce customer access to its motorcycles and hurt the dealers' businesses.

In the short term, Harley says it will absorb the cost of the tariffs, rather than passing it on to customers.

The company expects the incremental cost for the rest of 2018 to be $30 million to $45 million.

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