Harley to Shift Some Production Overseas: Harley and GE in Trump Crossfire:

Trump seeks to bring jobs to the US via tariffs. It's backfiring.

In yet another example of the silliness of Trump's trade policy, Harley-Davidson to Shift Production Overseas to Offset EU Tariffs.

Harley-Davidson Inc. plans to shift production overseas to avoid European Union tariffs on its iconic motorcycles, the latest manufacturer to reconfigure operations amid a widening global trade fight.

Harley said in a security filing on Monday that tariffs of 31% the EU enacted last week on its motorcycles would raise the cost of each Hog it ships there from the U.S. by about $2,200. Rather than raise prices, Harley said it would shift production of the motorcycles it sells in the EU outside of the U.S. over the next 18 months.

“Expanding international production to alleviate the EU tariff burden is not our preference, but it’s the only sustainable option we have to make motorcycles available and affordable to EU customers,” Harley spokesman Michael Pflughoeft said.

“This will make their manufacturing less efficient.,” said Sharon Zackfia, an analyst for William Blair & Co. “It’s just another another headache for Harley.”

GE Caught in Trade Fight

The Wall Street Journal reports GE Factories in Wisconsin, South Carolina Caught in Trade Fight.

GE’s MRI business is just one part of the company’s health-care division, which last year accounted for about 16% of companywide sales, or $19 billion. Still, it offers a window into the complex interconnections of global trade, where components made in one country get assembled in another—and, once in finished form, may be sold back into the first. Some parts make more than a single roundtrip.

“Global supply chains have become so integrated over the last few decades that it’s really hard to put tariffs in place that are not going to harm some domestic manufacturers,” said William Hauk, an economics professor at the University of South Carolina.

The stakes are higher for companies like GE that own the factories producing their imported parts, said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, a Washington, D.C., think tank. “The factory may become economically obsolete even though it’s technically very good,” Mr. Hufbauer said.

Winning Easy

Trump must be exceptionally pleased with all this easy winning.

  • Autos: BMW's largest plant in the world is in South Carolina
  • MRIs: GE in the Spotlight
  • Harley Motorcycles: Harley will move some production overseas
  • Nails: US' largest producer of nails at risk
  • Whiskey
  • Tires: Three US businesses may go under
  • Cranberries
  • Lobster
  • Nuts, Soybeans, Chicken, beef etc.

Related Articles

For all the affected industries related to China retaliation, please see Chinese Tariff List Translated, 545 Items: US Farmers and Automakers Clobbered.

Finally, I repeat No Matter What Any Other Country Does, the Correct Action is to Reduce Tariffs.

Mike "Mish" Shedlock

Comments
No. 1-25
mdbu
mdbu

You don't offer any evidence to back up the claim that it is "backfiring". That may end up being true but Wolfstreet has a much more detailed analysis which states that HD's statement is just political cover for a decision to offshore production to Thailand that was made in 2017.

Zardoz
Zardoz

... and they’ll be blaming Hillary’s emails to Benghazi when they’re laid off.

pgp
pgp

Let's face it, Harley is a relic. Yet another gasoline burning engine producer. A manufacturer of boat pump motors more notable for their noise than their performance. They are a company that refuses to innovate surviving on tradition, a faded American dream and an unsustainable religious following. Such relics are doomed regardless of trade wars.

pi314
pi314

First, you have no clue what the outcome will be. The US/NK were preparing for war six months ago and now their relation is dramatically better than ever. When the dust settles in 6 months, the US may well come up ahead. Just watch. Second, even with S&P losing 5% from peak, which may or may not be linked to current trade disputes, the job market is better than 6 months ago. Many of the created jobs are from companies moving back their operations from overseas. It is getting tiresome that every setback is criticized, even by Mish, when the overall picture is ignored.