Harley-Davidson announced Tuesday that it would be cutting its forecast for its profit margin. The company blamed this on recent European Union tariffs on imports of Harley-Davidson motorcycles. These EU tariffs are in retaliation for Trump tariffs on European Union products.
In a news release on its financial status, Harley-Davidson said that it had “adjusted its outlook” and expects “Motorcycles segment operating margin as a percent of revenue to be approximately 9 to 10 percent given the expected impact of tariffs in 2018.”
Harley-Davidson managed to lessen some of the impact of these tariffs by increasing the number of motorcycles it sent to the EU before the tariffs took effect.
The company also reported a 6.4 percent drop in U.S. motorcycle sales.
Harley-Davidson was already moving some production to Thailand before any of these recent tariffs took effect. However, it now views this factory as being crucial to avoid the 31 percent retaliatory tariff imposed by the European Union on imports of U.S. motorcycles. Harley-Davidson estimated that these new tariffs would end up costing it an additional $2,200 per bike to ship motorcycles to the EU.
The EU is the second largest market for Harley-Davidson motorcycles after the United States. The company estimated that the EU tariffs could cost it anywhere from $30 million to $45 million, and that the Trump administration's tariffs on imports of foreign steel and aluminum could cost it an extra $15 million to $30 million for raw materials.
On June 25, Trump criticized Harley-Davidson for being “the first to wave the White Flag” and of just using the tariffs as an excuse to ship jobs overseas.
Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse - be patient! #MAGA
— Donald J. Trump (@realDonaldTrump) June 25, 2018
Harley-Davidson also said that it would be announcing a new long-term strategy on July 30.
