Published: Tue, June 26, 2018
Money | By Ethel Goodwin

Trump Faces Trade War Fallout: Layoffs, Stock Declines and Harley's Move Offshore

Trump Faces Trade War Fallout: Layoffs, Stock Declines and Harley's Move Offshore

On Saturday, the European Union began to tax early $3.3 billion worth of imports from the United States, including Harley-Davidson motorcycles, in response to the Trump administration's 25 and 10 percent tariffs on steel and aluminum, respectively, imposed in late May.

Harley Davidson said that the company's prices will not rise due to "an immediate and lasting detrimental impact to its business in the region".

The EU implemented tariffs on just over $3 billion worth of USA goods in response to Trump's decision to hit steel and aluminum imports with tariffs. They are a response to the Trump administration's tariffs on steel and aluminum imports from Europe.

Additionally, retaliatory tariffs from the EU, Canada, Mexico, and more make it expensive to get finished goods into those markets.

In late April, Harley said Trump's metal tariffs would inflate its costs by $15 million to $20 million this year on top of already rising raw material prices that it expected at the start of the year.

"To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for European Union destinations from the United States to its worldwide facilities to avoid the tariff burden", Harley said in a statement.

Harley-Davidson sold nearly 40,000 motorcycles in European Union member countries past year. Harley reports it will share more information on this shift in its second-quarter conference call set for 8 a.m. July 24. It has three assembly plants outside the United States, one each in Brazil, India and Thailand.

Harley-Davidson's warning is a huge blow for the Republican President, who says he is safeguarding jobs in the US's industrial hotspots.

President Trump attempted to talk iconic American brand Harley-Davidson out of shipping more of its production facilities overseas on Monday in response to an increase in European taxes.

These examples of job losses come amid promises from Donald Trump to save American jobs, casting doubt across the country about the effectiveness of Trump's tariff strategy for trade.

Harley-Davidson employs more than 6,000 people globally.

Trump's global trade war has escalated with various USA allies in recent weeks.

He says the ultimate goal should be no tariffs. He has events that day in Milwaukee, where Harley-Davidson has its headquarters, and Mount Pleasant. Daimler AG warned last week that escalating tension between the us and China will impair earnings its Alabama SUV plant and lower profit this year.

Europe represents Harley's No. 2 market, after the United States, with sales past year approaching 40,000 units. Europe is a critical market for Harley-Davidson.

It also did not say which USA factories would be affected. The company, which is headquartered in Speaker Paul Ryan's congressional district, is moving some production to Europe to avoid the tariffs.

White House press secretary Sarah Huckabee Sanders defended Trump's trade policies Monday during a press briefing.

The EU threatened that its payback for those levies would be to boost taxes on USA motorcycles, Levi Strauss jeans and bourbon whiskey.

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