In an attempt to bring American jobs back to the States, Trump is breaking ties with several countries and not sparing even the closest of allies. His decisions are likely to affect the trade and cause more harm than good.
World War Trade
The trade war, Trump recently started, is gathering momentum as the rest of the world retaliates. The US of A is raising taxes on imports while others are also doing the same and targeting American products. Thus, the increased European tariffs are adding an average of about US $2,200 to every American-made Harley. An increase of Rs. 1.5 lakh may be hard to swallow for people used to buying big bikes for peanuts.
Chasing The Euros
Europe is the second largest source of revenue for the American bike manufacturer and the tariffs could hurt their earnings. Unfortunately, Harley are caught in the crosshair and considering setting up a plant in the European region for local assembly. Outside of the US, Harley Davidson has facilities in Brazil and India while a new one in Thailand will become fully operational in a few months. Brazil and Thailand plants only serve as assembly points. India will continue to remain the only country outside of the USA making a Harley Davidson from the ground up. The Street 750 and the Street Rod have a very high percentage of locally-sourced parts.
The company’s official statement reads:
“Increasing international production to alleviate the European Union tariff burden is not the company’s preference but it is the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe. The continent is a critical market for Harley-Davidson.”
The news seems to have shocked the American President as he may have been under the impression that the United States is immune to fresh retaliatory tariffs. Donald is furious to hear that Harley is shifting part of its base out of its homeland and threatens of steeper taxes on Harleys if they import bikes made outside of the USA back into the States. He, once again, didn’t fail to remind the world of the significantly higher import duties applicable for importing vehicles to India.
“Make In India” to “Import To India”
For some reason, India succumbed to the threats well before the canons started firing and dropped the taxes on 2-wheeler imports from 75% to 50%. At the same time, manufacturers gunning for higher localization for their bikes suffered an increase in taxes. Going against the “Make In India” slogan, the authorities raised the taxes on locally manufactured bikes from 10% to 15%. Thus, the move bridged the gap between imported motorcycles and locally-manufactured ones giving Harley Davidson an upper hand. It benefitted fewer Japanese and European brands as most of them import from Thailand and pay little to no duties. Triumph Motorcycles were hit the worst as the British brand had jumped head-first into the Indian market by setting up an assembly plant in Gurgaon.
Harleys To Get Cheaper In India
Harley will soon be licking their second candy once the Thailand plant is up and running. This facility will make Harley Davidson bikes even cheaper for us, thanks to the Free Trade Agreement with the Southeast Asian nation. I’m sure the policies will be reversed after the mid-term elections if the opposition is able to snatch enough seats. Or, hopefully, it’ll be undone after the next election. The question is, can Harley Davidson survive that long?
God knows how much longer Mueller is going to take to catch up with Donald Trump.
Source: Team-BHP News
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