Harley-Davidson "may consider" manufacturing in Europe over tariffs

In an interview with CNBC the CEO of Harley-Davidson, Matt Levatich, has addressed the situation regarding the US-EU trade war. The first idea the company had was to move production for the European market to its to Thailand factory. However, if approval from the bloc is not received, then the brand would look at setting up in Europe.

Harley-Davidson last year became caught in the middle of an escalating trade war between the US and EU. Following the imposition of aggressive tariffs by President Trump on European steel and aluminium, Harley-Davidson became one of the high profiles companies upon whom equally aggressive counter-tariffs were imposed by the European Union.

The increased tariffs on the Milwaukee brand amount, at present, to 31%. By 2021, this will have risen to 56%, a sufficiently high enough amount to compel the company to look at alternative approaches.

Harley's announcement that some production elements would be moved overseas drew vocal criticism from President Trump who described it as "a really bad move".

The company's initial plan to sidestep the EU tariffs was to assign the European-destined part of its production to its factory in Thailand; what Levatich refers to as the "Thailand investment". This was not born out of a need to increase production volume but out of a need to protect its market share and the company's viability.

Levatich added that the "Thailand investment" could still be vetoed by the EU. In the case that Harley does not get approval from the EU to import products from Thailand to work around the tariffs, the company would then consider investing in Europe instead. This is likely a cheaper solution than the 56% levies it would face by continuing to export from the US.

Harley-Davidson is presently covering expenses of nearly $100 million to continue its European presence without pushing up prices. Harley’s “foreign investment”, whether it’s in Thailand or in Europe, would allow products sold in Europe not to avoid a dramatic price increase, without the company having to pay the levies out of pocket.

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