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
Carlos_
Carlos_

No surprise there. GM will do the same: http://www.the-japan-news.com/news/article/0004531697 Only Trump and his supporters think that the strategy will work. Tariff will not work. The idea that China will buckle is preposterous. IMO a country like China that has endure (its people) a lot worst than any tariff can bring to them. China will not buckle. Americans on the other hand are use to the good life and lower prices and they will not take pain for long (remember the oil shock?). So no Trump will also lose this one. Extortion as a tool for negotiation only works for small potato businessmen, not countries

Carl_R
Carl_R

It's a two-headed advantage for American manufacturers to move production overseas. They not only avoid the tariff on goods exported, they avoid the tariff on steel an aluminum that they would have to pay if they manufactured in the US. Yes, I know, they could use US made steel, if they can get it, but the prices will be significantly higher due to the tariff.

If I could describe the absolute worst possible strategy, I would say, put a tariff on manufacturing inputs, like steel, aluminum, and chips, to kill American manufacturers and then let foreign countries retaliate by putting a tariff on manufacturing outputs, to further kill American manufacturers.

Marco_
Marco_

The tarriffs aren't backfiring. They are designed to bring global recession. There is zero evidence anywhere that says tarriffs help so let's not pretend that this is just a side-effect.

pi314
pi314

To be fair, there are many more factories returning to the US. US is the largest market so it makes sense to build here if tariffs become the norm. Overall is a gain for the US, a loss for China.