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EU tariffs force Harley-Davidson to move some production out of US – business live EU tariffs force Harley-Davidson to move some production out of US – business live
(35 minutes later)
Wall Street’s decline is accelerating, sending other markets lower in its wake, as the global trade tensions continue to grow.
Investors have been increasingly concerned about the fallout from Trump’s actions on tariffs, and today’s developments - the threat of more restrictions on China and Harley-Davidson cutting some US production - are confirming their worst fears.
Both the Dow Jones Industrial Average and the S&P 500 are down around 1%, with the Nasdaq Composite nearly 1.4% lower on Trump’s tech plans.
In Europe the FTSE 100 has dropped 1.9% while in Germany - whose car production would be hard hit by US tariffs - the Dax is down 1.8%.
Shares in Carnival, the world’s biggest cruise company, have dropped more than 8% after it cut its earnings forecast for 2018.
In the second quarter it said revenues had risen by 10.4% with earnings per share up from 52 cents a year earlier to 78 cents, helped by higher ticket prices and on-board spending.
But increased fuel costs and adverse exchange rates mean that it now expects its full year earnings to be $0.19 a share lower than it forecast in March.
A weak start to trading in New York:
Ding ding! The US stock market is open for trading....and trade war fears are biting.
The Dow Jones industrial average has fallen by 160 points, or 0.65%, to 24,420.
Technology shares are dropping, following reports that the Trump administration will block Chinese companies from investing in the US, and also restrict US tech exports to China.
Alphabet (Google’s parent company) is down by 1.7%, semiconductor maker nVidia is down 2.1% and aircraft maker Boeing is down 2%.
Harley Davidson is also dropping, down 2% after outlining its response to Europe’s new tariffs on US goods.
Shares in Harley-Davidson open over 2% lower after the motorcycle manufacturer announces plans to shift production away from the US due to EU tariffs; says tariffs will add over $2K to the cost of each vehicle exported to the EU
Bloomberg points out that Harley’s sales in Europe hit their highest level since 2011 last year (as a share of total sales).Bloomberg points out that Harley’s sales in Europe hit their highest level since 2011 last year (as a share of total sales).
Harley-Davidson to shift some production of #motorcycles out of U.S. after EU #tariffs https://t.co/bIbL6M4gDT via @business @tpalazzo #tradewar $HOG pic.twitter.com/JDXDQMmAGSHarley-Davidson to shift some production of #motorcycles out of U.S. after EU #tariffs https://t.co/bIbL6M4gDT via @business @tpalazzo #tradewar $HOG pic.twitter.com/JDXDQMmAGS
Clearly the company can’t afford to lose sales in such a ‘critical market’ (which is why it will swallow the tariff cost itself, while it moves production out of America).Clearly the company can’t afford to lose sales in such a ‘critical market’ (which is why it will swallow the tariff cost itself, while it moves production out of America).
Here’s some reaction to Harley-Davidson’s plans to move some US production overseas, from former White House press spokesman Tony Fratto....Here’s some reaction to Harley-Davidson’s plans to move some US production overseas, from former White House press spokesman Tony Fratto....
On this beautiful Monday morning, #TradeWars remain stupid...Harley-Davidson motorcycles exported to the EU will cost the company about $2,200 more, as it shifts production overseas to offset EU tariffs https://t.co/qFaPSn5bCK via @WSJOn this beautiful Monday morning, #TradeWars remain stupid...Harley-Davidson motorcycles exported to the EU will cost the company about $2,200 more, as it shifts production overseas to offset EU tariffs https://t.co/qFaPSn5bCK via @WSJ
ING economist Carsten Brzeski isn’t impressed either:ING economist Carsten Brzeski isn’t impressed either:
This is how you win a trade war. NOT. Harley-Davidson to Shift Some U.S. Production in Wake of Tariffs - TheStreet https://t.co/KhJtuBOOWVThis is how you win a trade war. NOT. Harley-Davidson to Shift Some U.S. Production in Wake of Tariffs - TheStreet https://t.co/KhJtuBOOWV
Peter Alexander of NBC News points out that Donald Trump has previously hailed Harley-Davidson as a great US business.Peter Alexander of NBC News points out that Donald Trump has previously hailed Harley-Davidson as a great US business.
Trump, last year: “Thank you Harley-Davidson for building things in America.”Tying it to winning WI in 2016: “I want to thank the people of Wisconsin. Great people. Amazing people. And they get it.” https://t.co/dlzui62PkQTrump, last year: “Thank you Harley-Davidson for building things in America.”Tying it to winning WI in 2016: “I want to thank the people of Wisconsin. Great people. Amazing people. And they get it.” https://t.co/dlzui62PkQ
CNN has a good first take on the Harley-Davidson news:CNN has a good first take on the Harley-Davidson news:
Harley-Davidson is already taking a hit in the trade fight between President Trump and European allies.Harley-Davidson is already taking a hit in the trade fight between President Trump and European allies.
The company is shifting some production of motorcycles for European customers out of the United States to avoid EU retaliatory tariffs.The company is shifting some production of motorcycles for European customers out of the United States to avoid EU retaliatory tariffs.
The EU is imposing tariffs on $3.2 billion worth of American goods, including motorcycles, orange juice, bourbon, peanut butter, motorboats, cigarettes and denim. They are a response to the Trump administration’s tariffs on steel and aluminum imports from Europe.The EU is imposing tariffs on $3.2 billion worth of American goods, including motorcycles, orange juice, bourbon, peanut butter, motorboats, cigarettes and denim. They are a response to the Trump administration’s tariffs on steel and aluminum imports from Europe.
For motorcycles, the EU is raising its 6% tariff to 31%. That will make each bike about $2,200 more expensive to export, Harley said. Harley is not raising prices for customers. The company said it will take a hit of $30 million to $45 million for the rest of this year.For motorcycles, the EU is raising its 6% tariff to 31%. That will make each bike about $2,200 more expensive to export, Harley said. Harley is not raising prices for customers. The company said it will take a hit of $30 million to $45 million for the rest of this year.
Harley-Davidson’s (HOG) stock fell 2% in premarket trading.Harley-Davidson’s (HOG) stock fell 2% in premarket trading.
Harley-Davidson will move some production out of the US to avoid EU retaliatory tariffs https://t.co/7j8nc9XKOQ pic.twitter.com/Gi941KMoptHarley-Davidson will move some production out of the US to avoid EU retaliatory tariffs https://t.co/7j8nc9XKOQ pic.twitter.com/Gi941KMopt
Donald Trump won’t be happy to hear that Harley-Davidson is moving some production out of America.Donald Trump won’t be happy to hear that Harley-Davidson is moving some production out of America.
The president singled out the motorcycle maker in his first State of the Union speech in February 2017, telling Congress that he would help companies like Harley-Davidson sell their goods abroad.The president singled out the motorcycle maker in his first State of the Union speech in February 2017, telling Congress that he would help companies like Harley-Davidson sell their goods abroad.
As the new president put it:As the new president put it:
I just met with officials and workers from a great American company, Harley-Davidson. In fact, they proudly displayed five of their magnificent motorcycles, made in the USA, on the front lawn of the White House.I just met with officials and workers from a great American company, Harley-Davidson. In fact, they proudly displayed five of their magnificent motorcycles, made in the USA, on the front lawn of the White House.
At our meeting, I asked them, how are you doing, how is business? They said that it’s good. I asked them further how they are doing with other countries, mainly international sales. They told me — without even complaining because they have been mistreated for so long that they have become used to it — that it is very hard to do business with other countries because they tax our goods at such a high rate. They said that in one case another country taxed their motorcycles at 100 percent.At our meeting, I asked them, how are you doing, how is business? They said that it’s good. I asked them further how they are doing with other countries, mainly international sales. They told me — without even complaining because they have been mistreated for so long that they have become used to it — that it is very hard to do business with other countries because they tax our goods at such a high rate. They said that in one case another country taxed their motorcycles at 100 percent.
They weren’t even asking for change. But I am.They weren’t even asking for change. But I am.
I believe strongly in free trade but it also has to be FAIR TRADE.I believe strongly in free trade but it also has to be FAIR TRADE.
Instead, Trump has provoked the European Union into imposing higher tariffs on £2.5bn of US imports, by slapping tariffs on steel and aluminium imports into America.Instead, Trump has provoked the European Union into imposing higher tariffs on £2.5bn of US imports, by slapping tariffs on steel and aluminium imports into America.
Harley-Davidson isn’t the only US company being hurt by Donald Trump’s tariffs.Harley-Davidson isn’t the only US company being hurt by Donald Trump’s tariffs.
A nail manufacturer in the mid-west state of Missouri says it has lost 50% of its business in two weeks, thanks to the new tariffs on steel imports.A nail manufacturer in the mid-west state of Missouri says it has lost 50% of its business in two weeks, thanks to the new tariffs on steel imports.
Mid Continent Nail Corporation imports steel wire from Mexico, so has seen prices surge to uncompetitive levels thanks to the 25% tariff on imports imposed by Trump earlier this year.Mid Continent Nail Corporation imports steel wire from Mexico, so has seen prices surge to uncompetitive levels thanks to the 25% tariff on imports imposed by Trump earlier this year.
The company has already laid off 60 temporary staff, and could axe another 200 by the end of July unless it gets a tariff exemption, quickly.The company has already laid off 60 temporary staff, and could axe another 200 by the end of July unless it gets a tariff exemption, quickly.
According to local news outlet Missourinet, Mid Continent Nail Corporation produces half of the nails made in America, but has seen orders tumble as customers find cheaper products elsewhere.According to local news outlet Missourinet, Mid Continent Nail Corporation produces half of the nails made in America, but has seen orders tumble as customers find cheaper products elsewhere.
Trump’s tariff on steel imports has caused the country’s remaining major nail producer to lose about 50% of its business in two weeks. Company laid off 60 temp workers. It could slash 200 more jobs by the end of July and be out of business around Labor Day https://t.co/yy4LhSgDYITrump’s tariff on steel imports has caused the country’s remaining major nail producer to lose about 50% of its business in two weeks. Company laid off 60 temp workers. It could slash 200 more jobs by the end of July and be out of business around Labor Day https://t.co/yy4LhSgDYI
Shares in Harley-Davidson have fallen almost 2% in pre-market trading in New York.Shares in Harley-Davidson have fallen almost 2% in pre-market trading in New York.
Traders are calculating that absorbing the $100m annual cost of Europe’s new tariffs will hurt Harley’s profits.Traders are calculating that absorbing the $100m annual cost of Europe’s new tariffs will hurt Harley’s profits.
We don’t yet know how many US jobs will be affected by Harley-Davidson’s decision to move some production from America to Europe.We don’t yet know how many US jobs will be affected by Harley-Davidson’s decision to move some production from America to Europe.
But it’s possible that the company’s base in Milwaukee, Wisconsin could be hit badly.But it’s possible that the company’s base in Milwaukee, Wisconsin could be hit badly.
Wisconsin is one of the rural states that backed Donald Trump in the 2016 presidential election, heartened by his promise to Make America Great Again and bring jobs back home.Wisconsin is one of the rural states that backed Donald Trump in the 2016 presidential election, heartened by his promise to Make America Great Again and bring jobs back home.
Harley’s announcement, though, shows that trade wars aren’t as “good and easy to win” as Trump once claimed....Harley’s announcement, though, shows that trade wars aren’t as “good and easy to win” as Trump once claimed....
Key swing state company moving production out of US after EU retaliates to Trump tariffs. Seems important --> Harley-Davidson to Shift Production of Motorcycles Out of U.S. After EU Tariffs https://t.co/zKYhPvlKoZ via @businessKey swing state company moving production out of US after EU retaliates to Trump tariffs. Seems important --> Harley-Davidson to Shift Production of Motorcycles Out of U.S. After EU Tariffs https://t.co/zKYhPvlKoZ via @business
NEWSFLASH: Harley-Davidson is planning to move some manufacturing out of America in response to Europe’s new tariffs on motorcycle imports.NEWSFLASH: Harley-Davidson is planning to move some manufacturing out of America in response to Europe’s new tariffs on motorcycle imports.
Harley-Davidson has just announced that the EU’s tariffs will have a serious impact on its business. The average tariffs on a Harley will rose to 31%, from 6% today, adding $2,200 to the average price of a motorcycle exported from the US to Europe.Harley-Davidson has just announced that the EU’s tariffs will have a serious impact on its business. The average tariffs on a Harley will rose to 31%, from 6% today, adding $2,200 to the average price of a motorcycle exported from the US to Europe.
Such a burden could make Harley’s uncompetitive in Europe.Such a burden could make Harley’s uncompetitive in Europe.
So the company has decided it must shift production of motorcycles for EU destinations from the US to its international facilities to avoid the tariff burden.So the company has decided it must shift production of motorcycles for EU destinations from the US to its international facilities to avoid the tariff burden.
The company says:The company says:
Harley-Davidson expects ramping-up production in international plants will require incremental investment and could take at least 9 to 18 months to be fully complete.Harley-Davidson expects ramping-up production in international plants will require incremental investment and could take at least 9 to 18 months to be fully complete.
It says this is the “only sustainable option” to ensure Harleys can still be sold in Europe (where it sold almost 40,000 last year).It says this is the “only sustainable option” to ensure Harleys can still be sold in Europe (where it sold almost 40,000 last year).
It says:It says:
Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe.Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe.
That could be serious blow to Harley workers in America - and a stark example of the damage that a trade dispute can cause.That could be serious blow to Harley workers in America - and a stark example of the damage that a trade dispute can cause.
Europe implemented tariffs on imports of US goods, including motorbikes and bourbon, in response to Donald Trump’s new tariffs on steel and aluminium.Europe implemented tariffs on imports of US goods, including motorbikes and bourbon, in response to Donald Trump’s new tariffs on steel and aluminium.
In the short term, Harley says it will absorb the cost of the tariffs, rather than passing it onto customers - costing it up t0 $100m per yearIn the short term, Harley says it will absorb the cost of the tariffs, rather than passing it onto customers - costing it up t0 $100m per year
It says:It says:
Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses.Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses.
Therefore, Harley-Davidson will not raise its manufacturer’s suggested retail prices or wholesale prices to its dealers to cover the costs of the retaliatory tariffs.Therefore, Harley-Davidson will not raise its manufacturer’s suggested retail prices or wholesale prices to its dealers to cover the costs of the retaliatory tariffs.
The Stoxx 600 index of European shares is on track for its biggest one-day fall in a month, according to Reuters data.The Stoxx 600 index of European shares is on track for its biggest one-day fall in a month, according to Reuters data.
European car firms are partly to blame, following Trump’s threat to impose 20% tariffs on auto imports from the EU.European car firms are partly to blame, following Trump’s threat to impose 20% tariffs on auto imports from the EU.
Renault are down 2.8%, Daimler has lost 2.5, while car parts firm Continental has shed 3.6% (fewer car sales means less demand for tires and brakes).Renault are down 2.8%, Daimler has lost 2.5, while car parts firm Continental has shed 3.6% (fewer car sales means less demand for tires and brakes).
Analysts at FXPro say traders are shunning riskier assets, thanks to Donald Trump’s repeated threats to impose tariffs on America’s trading partners.Analysts at FXPro say traders are shunning riskier assets, thanks to Donald Trump’s repeated threats to impose tariffs on America’s trading partners.
Over the weekend President Trump indicated that if trade barriers and tariffs against the US were not removed that he would have no choice but to add further sanctions against those countries targeting the US.Over the weekend President Trump indicated that if trade barriers and tariffs against the US were not removed that he would have no choice but to add further sanctions against those countries targeting the US.
The stock market selloff is gathering pace.The stock market selloff is gathering pace.
Britain’s FTSE 100 is now down 96 points, or 1.2%.Britain’s FTSE 100 is now down 96 points, or 1.2%.
Mining stocks are helping to drive the selloff, with Anglo American down 3.3% and Antofagasta losing 2.6% - and dragging the sector down to a seven-week low.Mining stocks are helping to drive the selloff, with Anglo American down 3.3% and Antofagasta losing 2.6% - and dragging the sector down to a seven-week low.
That reflects concerns that a trade war will hurt global growth, and dampen demand for commodities like iron ore, copper and nickel.That reflects concerns that a trade war will hurt global growth, and dampen demand for commodities like iron ore, copper and nickel.
Oil giants are also falling, matching a drop in the price of crude after the Opec cartel agreed to raise production levels last week.Oil giants are also falling, matching a drop in the price of crude after the Opec cartel agreed to raise production levels last week.
Connor Campbell of SpreadEx says:Connor Campbell of SpreadEx says:
With a troublesome US open on the horizon, the European indices saw their losses intensify as Monday went on.With a troublesome US open on the horizon, the European indices saw their losses intensify as Monday went on.
The FTSE was one of the worst performers at the start of the week. Not only was the UK index dealing with the same trade war fears gripping its peers, it also had to process Brent Crude’s 1.2% decline, a move that took the black stuff back towards $74.50 per barrel and left Shell and BP down 1.1% and 1.8% respectively.The FTSE was one of the worst performers at the start of the week. Not only was the UK index dealing with the same trade war fears gripping its peers, it also had to process Brent Crude’s 1.2% decline, a move that took the black stuff back towards $74.50 per barrel and left Shell and BP down 1.1% and 1.8% respectively.
This in turn forced the FTSE 90 points lower, taking the index back under 7600 and only 50 points away from last Thursday’s 7 week nadir.This in turn forced the FTSE 90 points lower, taking the index back under 7600 and only 50 points away from last Thursday’s 7 week nadir.