WSJ ArticleCOLLAPSE

Harley-Davidson to Shift Production Overseas to Offset EU Tariffs

By Bob Tita and Allison Prang | Jun 25, 2018

TOPICS: Tariffs, Trade Disputes

SUMMARY: Purportedly in response to the substantial tariffs imposed by the European Union (EU) on its products, Harley-Davidson announced plans to shift production overseas. The EU imposed tariffs on several U.S. goods in retaliation to the Trump administration’s decision in March to impose tariffs on imports of steel and aluminum. Harley-Davidson estimates that the EU tariffs would raise the cost of each motorcycle it ships there from the U.S. by about $2,200, a cost that consumers may not be willing or able to absorb. The tariffs add to Harley-Davidson’s challenges, as it struggles to address declining sales in the U.S. and increasing price competition in international markets.

CLASSROOM APPLICATION: This article can be used to discuss how increasing global trade tensions are impacting firms and influencing the decisions they must make about their supply chains.

QUESTIONS: 

1.   (Introductory)   What factors contributed to Harley-Davidson’s decision to shift production   overseas?

2.   (Introductory)   How could the increasing global trade tensions impact the supply chains of   companies?

3.   (Advanced) Do   you support the decision of Harley-Davidson to shift production overseas?   Explain your point of view.

4.   (Advanced)   President Donald Trump tweeted that Harley-Davidson was “using EU   tariffs as ‘an excuse’ to shift production overseas” and that its   decision to shift production overseas would be the “beginning of the   end.” Do you support his point of view? Defend your position.

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