Trump vows to hit back at EU as tariffs bite Harley-Davidson

A Harley-Davidson bike is displayed in their office in Singapore October 13, 2016. — Reuters pic
A Harley-Davidson bike is displayed in their office in Singapore October 13, 2016. — Reuters pic

NEW YORK, April 24 — US President Donald Trump yesterday threatened retribution against Europe over tariffs that have bruised profitability at iconic US motorcycle company Harley-Davidson.

Trump quoted commentary from Fox Business Network anchor Ashley Webster, who pointed to the drag from European Union tariffs as a key factor in falling sales by the iconic US motorcycle maker.

“So unfair to US,” Trump said on Twitter. “We will reciprocate.”

The commentary was a pivot of sorts for the US president in targeting Brussels rather than Wisconsin-based Harley.

He had previously lashed out at the 116-year-old company after it announced plans last summer to shift some US manufacturing overseas as a way to circumvent the new EU tariffs, which were imposed on key American goods in retaliation for Trump's tariffs on steel and aluminum.

Trump's latest threat comes as Washington and Brussels are close to the start of formal trade talks, now that the US leader has moved closer to settling a months-long fight with China.

Harley-Davidson reported a US$21 million (RM86.76 million) hit from tariffs in the first quarter, which contributed to the 26.8 per cent drop in profits to US$127.9 million amid lower revenues.

In June, Harley-Davidson announced it was shifting some manufacturing capacity overseas as “the only sustainable option” following punitive import duties of 31 per cent in the EU from the prior six per cent.

The motorcycle manufacturer in January 2018 announced it would close a Missouri factory and consolidate jobs in Pennsylvania at the same time as it was building a new factory in Thailand.

The Thailand operation is part of Harley's “tariff mitigation” strategy that is also aimed at the growing Southeast Asian market, the company said.

The company is seeking regulatory approval from EU authorities in Belgium to source Europe's motorcycles from Thailand at a tariff level of six per cent.

Chief Executive Matthew Levatich said the company had a “strong” case for the Thailand plant but was exploring other options in case Brussels did not concur.

“Europe has always been an option as we looked at how to mitigate the EU retaliatory tariffs. It wasn't our preferred option. Thailand was,” Levatich told analysts on a conference call.

“So we have a number of other alternatives that we have at our disposal, should that approval not come that way.”

Levatich said Europe will be “even more important” to its long-term business than previously, because of the popularity of new middleweight motorcycles the company is introducing.

Harley also is focused on building up a new generation of riders to make up for declines in the older population that has been its bedrock.

The company said it found 278,000 “new riders” in the US in 2018 and that “this group is the most diverse across age, ethnicity and gender in all the years Harley-Davidson has tracked this data.”

Executives pointed to robust social media interest in its LiveWire electric motorcycles that are scheduled to arrive in dealerships later this year.

Shares of Harley-Davidson were down 1.0 per cent at US$39.33 in afternoon trading. — AFP

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