Harley-Davidson's decision to shift manufacturing out of the US confirms the worst fears about Trump's trade battles

pulse

June 25, 2018 9:17 PM

Harley-Davidson announced the company would shift production from the US to Europe in response to the tariff battle between the EU and President Donald Trump. The move could be a sign of things to come, according to trade experts.

American motorcycle company Harley-Davidson announced it would move some of its production outside of the US in response to the trade spat between the EU and President Donald Trump.
Harley's move is an example of what economists say will likely be a growing trend: businesses leaving the US because of Trump's tariffs.
Harley's departure is particularly embarrassing for Trump since the president has repeatedly praised the company.

Iconic US motorcycle company Harley-Davidson announced Monday that it was moving more of its production outside of the US in response to new tariffs, showing the reality of how President Donald Trump's trade fights can backfire.

Harley-Davidson said the EU's new tariffs on US-made motorcycles would drive up costs and force the company to shift a sizable portion to its production outside of the US to avoid the tariff.

The company said the EU's tariff increase — to 31%, from the current 6% — would increase the cost of every motorcycle shipped from the US to Europe by $2,200.

Mary Lovely, a senior fellow at the Peterson Institute for International Economics, and Yang Liang, a graduate associate at the Moynihan Institute of Global Affairs, highlighted the possibility that companies will abandon the US in a recent policy paper.

"Beyond the immediate damage to American competitiveness, trade restrictions push high-technology firms to locate elsewhere in the future," the researchers wrote. "Tariffs can diminish trade flows, but ideas are easily relocated."

Additionally, retaliatory tariffs from the EU, Canada, Mexico, and more make it expensive to get finished goods into those markets. By shifting production closer to the point of sale, businesses can avoid the increased cost to sell in Europe or other countries with restrictions.

Alden said that given those two compelling economic cases, Harley-Davidson could be just the start of a series of manufacturing relocations outside the US.

pulse

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng