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Looks like we're in a retaliatory feedback loop.
https://www.wsj.com/articles/eu-to-begin-retaliatory-tariffs-against-u-s-on-friday-1529499666?mod=hp_major_pos1
https://www.wsj.com/articles/eu-to-begin-retaliatory-tariffs-against-u-s-on-friday-1529499666?mod=hp_major_pos1
The Shop
I can't imagine why tariffs would affect motorcycles anyway, outside of Alta there isn't a off-road moto manufacturer.
Or are you hinting that there is potential for the price of KTMs etc to go up in the US as a result of US taxing those goods?
US levies tariffs on steel and aluminum; EU retaliates with a tariff on Harley's.
But you're probably right, given President Trump's attitude toward tariffs there's no chance that the US will levy tariffs on EU based motorcycle manufacturers in retaliation for the EU retaliatory tariff on Harley.
Just commenting that if you're planning to buy one of those brands in the next few months you may want to move on that sooner than later. And, as it turn out, it's not like they haven't considered throwing motorcyclists under the bus before.
https://ultimatemotorcycling.com/2017/05/12/ama-demands-immediate-action-proposed-tariff-european-motorcycles/
I'm not sure how this works with Japan.
The United States has a $20.4 trillion dollar GDP (gross domestic product, e.g. in layman's terms "person 1 buys a car from American MFG A for $30000, $30000, gets added to the countries GDP") which is $1.2 TRILLION dollars more than the remainder of the G7 COMBINED, so technically, Trump isn't too concerned whether Europe want to remove their tariffs, because, American MFG is travelling just fine without them, how ever, would appreciate a more competitive global economy.
If you want to watch a video to gain proper info, watch this
Pit Row
Tariffs originally were a means for the crown (government) to raise revenue. Only later did they become an instrument of protection for domestic industry. As far back as the 1940s though people began to realize that tariffs are really not good for the world as a whole and can seriously impede economic growth.
In 1947 23 countries signed the GATT (General Agreement on Tariffs and Trade). An agreement where all members pledge to gradually eliminate their import tariffs. In 1994 a new agreement was signed, this time with 123 countries and with this the WTO (World Trade Organization) was born.
General Agreement on Tariffs and Trade - Wikipedia
Yes the EU has tariffs. So does everyone else. No they are not substantially higher that those in the USA. The EU has an equivalent GDP to that of the USA of $20.9 Trillion (2017 data).
Hint. If Trumps lips are moving? He’s probably lying.
I would suggest you use more reliable sources than his lips.
Did you notice at the G7 summit Trump had a simple solution? Just drop all tariffs.
Crickets from the EU, and the media hardly reported it.
You only saw KTM win right? So it must be the fastest!
At least you have a chance with the other guys lol
Of the remaining 40%, the bulk percentage are sold in the Asia-Pacific area. Most will not remember or know this, but years ago Harley faced a 100% tariff in the Asia-Pacific market when Harley sales began to drastically increase. To get around the profit loss from the tariff increase, Harley had enough justification to invest in an assembly operations plant in Thailand and India. In doing so, Harley actually increased profit margins per unit based on drastically decreased labor rates on units being produced in Thailand & India, although they were clear a labor wage race was not their primary objective.
I anticipate that Harley will take a hard look at domestic built exports to EU nations in order to maintain profit margins. I would suspect a couple options:
1) Harley shifts the EU destined product assembly from the US to one of three worldwide assembly plants in Thailand, India, or Brazil. Although all 3 plants trade at a 6% tariff rate, I would suspect India to be the most likely candidate as they already trade heavily with EU nations and logistically it makes sense.
2) Harley invests in another assembly plant in an EU based country to avoid an import tariff altogether. This would be unlikely based on Harley’s current capital constraints. Although, would be more justifiable based on the recently imposed increased duties.
3) Harley may consider a semi-knockdown operation where manufacturing and assembly still stays in the US but they are not exporting a complete good. This allows Harley to claim the export as component parts instead of a motorcycle which allows them to export at a lower tariff rate. The semi-knockdown unit would still have to undergo final assembly in the EU. Note: In this scenario, Harley would likely ship the entire motorcycle together, but the major components like the engine, suspension, and wheels would not be on the bike. They would be considered “part
exports.” The final assembly operation in EU (Or India or Thailand) would then bolt everything together.
4) Harley just increases the EU sale price to offset the tariff. This is the easiest to do, but they will surely lose market share due to decreased sales volume (When Thailand was charging a 100% tariff, a Road Glides were selling for nearly $60k, and yes, they were still selling in lower numbers)
Will Harley lose US production due to the tariff? Probably. Will Harley still find a way to maintain (or even increase) profit? Probably. Harley will be OK in the end.
It is important to note that the metal’s price increase is also causing price increases and cutting into profit margins noticeably.
You have to understand that our US tariff increase on the EU brands are also going to put them in the same scenario. It would not surprise me to see KTM/Husqvarna invest in a US based assembly plant to assemble complete goods or semi-knockdown units. Yet no-one is talking about this because all anyone can see is the mainstream media BS and political BS around the “trade war.” In a perfect world, Trump’s plan works and instead of importing EU bikes, the Mfg’s are forced to setup shop in the US and create
"Final assembly" would have to occur in a destination assembly plant. The product would not carry a "made in the US tag" as the final assembly operation dictates the country of origin.
Raw material cost increase will currently be Alta's biggest challenge in maintaining profit margins.
Alta's cost will be more practical if the EU brands decide to raise MSRP to offset the tariff increase.
Post a reply to: Pick that new KTM/BMW/Ducati/GasGas/etc you're thinking about sooner than later