U.S. President Donald Trump weighed in on Harley-Davidson’s most recent earnings announcement by criticizing how tariffs imposed by the European Union had reportedly hurt the company’s earnings.
Last year, Trump frequently criticized Harley-Davidson for its plans to move some U.S. production overseas to avoid European Union duties, which were imposed in retaliation to tariffs the White House placed on imported steel and aluminum last year.
The president went so far as to call for a boycott against the motorcycle company in June.
However, the iconic motorcycle manufacturer surged past expectations for first-quarter profits on Tuesday and drew a change of tack from Trump, who vowed to protect the motorcycle maker from European tariffs, driving its shares up 3 per cent.
“So unfair to U.S. We will reciprocate,” the president pledged in a tweet.
“The shares have rallied (we think) in anticipation of potential tariff relief … we remain cautious in our outlook for the U.S. motorcycle industry, and continue to rate the shares Hold,” Stifel analyst Drew Crum said during Harley-Davidson’s earnings call.
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Earlier in 2019, the company announced that the retaliatory duties imposed by the EU in response to Trump’s tariffs on steel and aluminum would cost the company between US$100 million and $120 million in 2019.
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EU tariffs on motorcycles in the U.S. increased to 31 per cent from 6 per cent last June and are set to rise to 56 per cent in 2021.
In addition, China’s tariffs on the bikes exported from the U.S. have increased to 55 per cent from 30 per cent as a result of the trade war between the world’s two biggest economies.
The company beat expectations for first-quarter earnings by more than 30 cents per share and stuck to shipment forecasts for the whole of 2019, which some analysts had expected to be cut.
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Despite this, overall sales continued to fall. The company attributed much of this decrease to the tariffs imposed by the EU, but motorcycle sales have also been falling overall.
U.S. retail motorcycle sales, or sales by dealers to customers, fell 4.2 per cent in the first quarter ended March. 31. European sales were down 2.1 per cent.
The company’s overall net income fell 26.7 per cent to $127.9 million in the quarter, while revenue from motorcycles and related products fell 12.3 per cent to $1.19 billion, roughly in line with forecasts.
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To combat this, the company revealed a 10-year plan to attract and retain younger customers by investing in electric bikes and setting up riding schools across the country.
In addition, analysts confirmed on Tuesday’s earnings call that Harley-Davidson plans to supply China from Thailand by the end of 2019.
— With a file from Reuters
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