Trump’s Trade War Adds To Harley-Davidson Troubles

The maker of America’s iconic Harley-Davidson motorcycles, rocked by President Donald Trump’s trade war and falling demand, barely broke even in its latest earnings report and shares plummeted the most in a year before recovering.

Harley’s American retail sales tumbled 10 percent in 2018′s final quarter — the eighth quarter they fell ― and profit missed what analysts expected in Tuesday’s report.

The dismal earnings reflected the company’s continued struggle with declining sales as Baby Boomers age and younger generations turn to lighter and less expensive competitors.

The report also shows Trump battle scars. Trump, who extolled the company during his presidential campaign and in 2017 invited Harley executives to the White House, added to the Milwaukee company’s woes with tariffs that resulted from his trade war with Europe and China. Then, when Harley announced it would move some production overseas to avoid the tariffs, Trump angrily advocated a boycott of the company’s motorcycles.

The company said in a regulatory filing last summer that retaliatory tariffs imposed on American exports by the European Union rose between 6 percent and 31 percent, resulting in an average $2,200 per motorcycle exported to the EU.

Demand for the bulky bikes dropped in Europe and Asia, with worldwide sales down 6.7 percent in the quarter, noted Bloomberg. The company’s turnaround plan calls for half of sales to be outside the U.S. — which executives believe has a bigger demand upside — by 2027. 

Harley is investing in a new factory in Thailand to produce the majority of motorcycles sold in the EU and China by the end of this year. The plant will mean that tariff costs of as much as $120 million this year will be eliminated next year, according to Bloomberg.

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