Harley-Davidson says Trump's trade war could take a $100 million bite out of its business each year

Harley-Davidson says Trump's trade war could take a $100 million bite out of its business each year

trump harley davidson

Drew Angerer/Getty Images

President Donald Trump speaks briefly to reporters after greeting Harley Davidson executives on the South Lawn of the White House, February 2, 2017


Motorcycle maker Harley-Davidson warned once again on Tuesday about the sizable impact President Donald Trump's trade war will likely have on its business.

"As a result of the recently enacted tariffs, we expect to incur approximately $45 million to $55 million of increased costs," Harley-Davidson chief financial officer John Olin told Wall Street analysts on a conference call of the impact they can expect from tariffs this year. "This includes incremental costs of approximately $15 million to $20 million for steel and aluminum, and approximately $30 million to $35 million for EU tariffs."

He continued: "The annual ongoing impact of the margins is $90 million to $100 million."

Harley first warned of a "tremendous cost increase" from European tariffs in a regulatory filing in June. Those continental tariffs were enacted by the European Union in response to a US tax on imported metals, the first shot in the White House's quickly expanding trade war.


That original filing said the impact would likely be $30 million to $45 million. Olin said on the call Tuesday that window was "a broader range" because the company was "looking to see what the inventory situation would be when the tariffs got enacted."

Once the tariffs were formally announced by the European Commission and enacted at the end of June, Harley said it raced to move some already-assembled bikes to the continent ahead of the deadline in order to avoid paying an extra tax.

"As we learned about the potential for increased tariffs in the region, we did our best to move product into Europe," Olin said on the call. "And as you can see, our overall company inventory is up quite a bit."

Harley is also finishing up work on a new production facility in Thailand, which should be online by the end of this year to help it shoulder some of the increased costs.

"When we look at our Thailand facility, which will come online in early in the fourth quarter, the purpose of the facility, like we have in Brazil and India, is to be able to provide a lower price to our consumers and one that is not burdened with excessive tariffs," Olin said, adding that product bound for Europe could be made in any of its three international facilities, not just Thailand.


Shares of Harley were up about 8% Tuesday morning, thanks to an earnings report prior to the conference call that topped Wall Street's expectations.

Management tried to keep the morale high as well, adding that the company was doing its best to help end the ongoing trade war that has sent shudders through financial markets and sent Harley's stock down 14% since the start of the year.

"We are working with all governments we can do to do the best we can to get these tariffs removed and that's all I can say about it," Olin said. "We are very engaged and got a dialogue and a constant dialogue going on with the respective parties that we need to."

Now read: