Harley-Davidson Inc. (HOG) has cautioned that any imports tariffs imposed in retaliation to President Donald Trump's plans to impose levies on steel and aluminium coming into the United States would have a "significant" impact on the iconic motorcycle maker's overseas sales.
The warning followed a suggestion from European Commission President Jean-Claude Juncker that U.S. motorcycles, as well as a host of other products, could face still tariffs if Trump's plans to impose similar charges is made official. Earlier Tuesday, Bloomberg news reported that a draft EU list of potential tariff targets, which would be hit by the same 25% levy Trump has suggested for steel imported into the United States, includes Harley Davidson motorcycles, t-shirts, blue jeans and bourbon.
"Harley-Davidson's purpose is to help our customers fulfill dreams of freedom around the world," the company said in a statement late Monday. "We support free and fair trade. Import tariffs on steel and aluminum will drive up costs for all products made with these raw materials, regardless of their origin."
"Additionally, a punitive, retaliatory tariff on Harley-Davidson motorcycles in any market would have a significant impact on our sales, our dealers, their suppliers and our customers in those markets," the statement added.
Around 16% of the 242,788 Harley Davidson bikes shifted around the world last year were sold in Europe, according to its latest earnings report, which noted that its international operations and sales "are subject to various risks, including political and economic instability, local labor market conditions, the imposition of foreign tariffs and other trade barriers."
"If the Americans impose tariffs on steel and aluminum, then we must treat American products the same way," Juncker said Friday when he hinted at a package of tariffs that could impact $3.5 billion in U.S. exports. "So now we will also impose import tariffs. This is basically a stupid process, the fact that we have to do this. But we have to do it. We will now impose tariffs on motorcycles, Harley Davidson, on blue jeans, Levis, on Bourbon."
A further dimension to the potential tariffs on Harley sales is the fact that the company is located in Milwaukee, Wisconsin, the home state of House Leader Paul Ryan, who is reported to be leading a Republican effort to convince the President to dial-down his trade war rhetoric.
"We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan," Ryan's spokesperson, AshLee Strong said in a statement Monday. "The new tax reform law has boosted the economy and we certainly don't want to jeopardize those gains."
Harley-Davidson shares closed at $45.23 each in New York Monday, after rising 2.33% on the session to trim their year-to-date decline to around 11.1%.
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