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
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.
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
- Tires: Three US businesses may go under
- Nuts, Soybeans, Chicken, beef etc.
Mike "Mish" Shedlock