The European Union on Friday began rolling out tariffs on American imports like bourbon, peanut butter and orange juice. The EU tariffs on $3.4 billion worth of U.S. products are retaliation for duties the Trump administration is imposing on European steel and aluminum.
President Donald Trump has used Harley-Davidson as an example of a U.S. business that is being harmed by trade barriers. Yet Harley has warned consistently against tariffs, saying they would negatively impact sales.
Harley-Davidson Inc. sold almost 40,000 motorcycles in the Europe Union last year, generating revenue second only to the United States, according to the Milwaukee company.
The maker of the iconic American motorcycle said in a regulatory filing Monday that EU tariffs on its motorcycles exported from the U.S. jumped between 6 percent and 31 percent, which translates into an additional, incremental cost of about $2,200 per average motorcycle exported from the U.S. to the EU.
“Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally,” the company said in prepared remarks. “Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson.”
Harley-Davidson will not raise its prices to avert “an immediate and lasting detrimental impact” on sales in Europe, it said. It will instead absorb a significant amount of the cost in the near term. It anticipates the cost for the rest of the year to be approximately $30 million to $45 million.
Harley-Davidson said that shifting targeted production from the U.S. to international facilities could take at least nine to 18 months to be completed.
The company is already struggling with falling sales. In January, it said it would consolidate its Kansas City, Missouri, plant into its York, Pennsylvania, facility. U.S. motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession.
So Trump is happily wrecking Harley-Davidson in order to win his trade war. US automakers are next, when it becomes cheaper to make cars and car parts in Europe and Asia, that's where production lines will be headed, and they'll take a whole lot of American jobs with them when plants here are mothballed.
I keep warning that there's plenty of red flags that Trump's trade war, in combination with his massive and increasingly unpopular tax cuts for the rich, is going to help cause a recession. Whether or not that becomes obvious by November is still up in the air, but by 2019 things are going to starting becoming increasingly grim economically, and this time we won't have Obama around to try to fix it.
By this time next year, we're going to be hurting. Of course, by this time next year we'll be deep in a Constitutional crisis from the Mueller report on Trump's misconduct, so who knows.
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