Harley-Davidson, Blaming E.U. Rates, will move some production out of the United States

Harley-Davidson, the maker of American motorcycles, said on Monday that it would move production of its iconic bikes overseas to avoid retaliatory tariffs imposed by the European Union in response to commercial moves from President Trump.

The decision, announced in a public filing, is the most recent and most publicized example of how Trump's trade war is starting to spread in the US economy as domestic firms get debate with a cascade of tariffs here and abroad. While Mr. Trump says his trade policy is aimed at reviving domestic manufacturing, Harley-Davidson's decision shows how government initiatives could have the unintended effect of reducing employment and the economy. economic growth in the United States.

Last week, the European Union fought back at Trump 's steel and aluminum tariffs with penalties of $ 3.2 billion worth of US products, including bourbon, orange juice, playing cards and Harley-Davidsons. On Monday, the Wisconsin-based company said European tariffs on its bikes had increased from 6% to 31% and estimated that it would add about $ 2,200, on average, to every motorcycle exported from the United States to the block.

Rather than passing on this cost, the company said it would transfer production to its facilities overseas to avoid EU tariffs.

"Harley-Davidson believes that the dramatic increase in costs, if passed on to its dealers and retail customers, would have an immediate and lasting negative impact on its operations in the region, reducing customer access to Harley-Davidson products and having a negative impact on its sustainability. "Dealer companies," said the company in the filing.

Harley's decision is of considerable importance given that Mr. Trump often champions the Wisconsin Company as an American icon and successful American manufacturer that creates jobs in the United States. Mr. Trump welcomed Harley-Davidson leaders to the White House in February 2017, where he called the firm a "true American icon" and thanked him "for building things in America."

He publicly criticized other countries, such as India, for imposing tariffs on Harley-Davidson and, over the weekend, threatened to retaliate to any country that throws "artificial" barriers to American products.

Harley-Davidson has not specified the number of jobs that it could transfer to its facilities abroad, as this increases European production. The company already produces bikes and parts in factories in India, Brazil, Australia and Thailand and said the change should take between nine and eighteen months. The company sold about 40,000 new motorcycles last year in Europe, which equates to one-sixth of its global sales, making the region its most important market after the United States.

Harley-Davidson shares fell more than 4% in the middle of the session.

"Increasing international production to lighten the EU The tariff burden is not the company's preference, but represents the only sustainable option to make its motorcycles accessible to EU customers. a viable business in Europe, "said Harley-Davidson in the filing.

The shift in production abroad is likely to draw the attention of Mr Trump who, as a presidential candidate, has publicly attacked companies like Carrier, a manufacturer of furnaces and air conditioners, who planned to close a factory in the United States and relocate its manufacturing activities to Mexico. Trump regularly tells his supporters that the US manufacturing sector is making a strong comeback and congratulates the companies that build the country.

But that was before Trump continued his plans to impose tariffs on steel and aluminum imports from around the world for the purpose, he said, of the world. to bring other countries to lower their trade barriers. Instead, the opposite has happened, as the European Union, Mexico, and Canada respond with their own levies, many of which are based on Mr. Trump's political base.

Representative Paul D. Ryan, House Speaker and Republican from Wisconsin, said Monday that Harley-Davidson's move was evidence that increasing trade barriers is a bad idea.

"This is further evidence of the injury caused by unilateral tariffs," Ryan said. "The best way to help US workers, consumers and manufacturers is to open new markets for them, not to raise barriers in our own market."

Other industries have also expressed concern that Trump 's tariffs on foreign steel and aluminum and retaliation from other countries will hurt companies.

Mid Continent Nail Corporation, a manufacturer of Missouri nails, said last week that it would probably lay off half of its employees and that it could go bankrupt because the higher costs of steel that it imports from Mexico makes its products prohibitive. expensive. American whiskey manufacturers also worried about their sales in Europe and some, like Brown-Forman, responded with ship more of their spirits abroad before the rates have taken effect.