It’s hard to find a more iconic American brand than Harley-Davidson. However, when a German biker buys one of the company’s motorcycles in the coming years, chances are it won’t come with a “Made in the USA” stamp.
That’s because Harley will move bike production out of America to deal with new EU tariffs. Those taxes, which were a response to the Trump administration’s trade war, will force Harley to make products for foreign consumers in their own backyard, the company said June 25.
Harley’s shift from America
“Expanding international production to alleviate the EU tariff burden is not our preference,” a Harley-Davidson spokesman said, according to The Wall Street Journal. “But it’s the only sustainable option we have to make motorcycles available and affordable to EU customers.”
Once the EU countered Trump’s new tariffs, the average price of a Harley would go up $2,200, the company said. As a result, Harley will take a $45 million hit in 2018.
Afterward, Harley reps said tariffs would cost the company close to $100 million every year. Following the announcement, the company’s stock price fell more than 6% in the first five hours of Wall Street trading.
Analysts suggested the company’s efficiency would suffer from the move, and investors responded in kind.
The EU strikes back
EU action came swiftly in response to Trump’s tariffs on imported steel and aluminum. When asked about the retaliation, European Trade Commissioner Cecilia Malmstrom said it was not the EU’s preferred course of action.
“However, the unilateral and unjustified decision of the U.S. to impose steel and aluminum tariffs on the EU means that we are left with no other choice,” Malmstrom said.
The policy hurts Harley so badly because its second-biggest global market is Europe. (The U.S. remains its top market, though sales are declining.)
By the end of 2019, most of the company’s bikes sold to European customers will have a new production site.
More Harley-Davidson layoffs ahead
Obviously, if production is moving overseas, Harley will not have the same volume of work for its American employees. That will likely mean more layoffs will come shortly down the road.
Ironically, Harley was one of the companies Trump hosted at the White House in 2017 as he touted American manufacturing. “Harley-Davidson is a true American icon, one of the greats,” Trump said at the time.
“So thank you, Harley-Davidson, for building things in America,” Trump said. “And I think you’re going to even expand…”
Trump’s tax cuts were aimed at companies who might be inclined to offshore more U.S. jobs, but that strategy hasn’t worked. In January 2018, Harley executives announced they were closing the company’s Kansas City plant and would move jobs to Thailand.
Harley-Davidson wasn’t the only major U.S. company that laid off large numbers of employees after getting a 40% tax cut from the GOP’s signature legislation.
With more job losses ahead, the company is becoming the clearest example of “America First” policies working against U.S. companies and workers.
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