Moneybox

Harley-Davidson Says It Will Move Some Production Out of the U.S. Due to Trump’s Trade War

KENOSHA, WI - JUNE 01:  Harley-Davidson motorcycles are offered for sale at the Uke's Harley-Davidson dealership on June 1, 2018 in Kenosha, Wisconsin. The European Union said it plans to increase duties on a range of U.S. imports, including Harley-Davidson motorcycles, in retaliation for the Trump administration's new tariffs on EU metal exports.  (Photo by Scott Olson/Getty Images)
A hog.
Scott Olson/Getty Images

Donald Trump’s trade war already seems to be driving some American manufacturing overseas. On Monday, Harley-Davidson said that it would move a portion of its motorcycle production out of the United States in order to avoid the tit-for-tat tariff skirmish between the White House and Europe that’s threatening the company’s international sales.

In retaliation for the Trump administration’s duties on steel and aluminum, the European Union imposed tariffs this month on a long list of politically sensitive American exports worth $3.3 billion, including bourbon, orange juice, and, yes, motorcycles. Harley-Davidson, which is based in Wisconsin, said in an SEC filing that tariffs on its Europe-bound bikes have risen from 6 percent to 31 percent. To deal with the problem, the company said it will moving its production of goods for Europe out of the U.S. to its factories abroad over the next 9 to 18 months.

The company did not say whether any jobs would be lost as a result. However, Europe is Harley-Davidson’s second largest market; riders there purchased more than 39,000 bikes last year, accounting for 16 percent of the brand’s total sales volume.

Whether or not the move leads to any job cuts, “iconic American brand moves manufacturing overseas” is almost certainly not the sort of headline the Trump administration was hoping its aggressive trade tactics would generate. It was also foreseeable: Our trade partners have a long history of responding to American protectionism by targeting politically sensitive products with tariffs of their own. While Harleys may not be a huge U.S. export, they are important in Wisconsin, which Trump carried by a hair-thin margin in 2016. As the Guardian notes, China also seems to be strategically placing tariffs on politically important exports, such as soybeans, which are produced in Trump-voting states like Iowa.

But hey, at least steel prices are rising in the U.S. thanks to the tariffs. That has to be good for American manufacturing, right? Right? Oh.