Motorcycle Behemoth and one of the American iconic companies Harley-Davidson Inc. (NYSE: HOG) caught in the crosshairs of President Trump’s international trade war. This century-old American motorcycle manufacturer which was founded in Milwaukee, Wisconsin has been through a lot and survived the Great Depression, periods of poor economic health and product quality. But, in recent times, once again it co e under controversy when the American President Donald Trump threatened Harley-Davidson on Twitter after the company announced plans to move some production overseas to avoid tariffs.
“A Harley-Davidson should never be built in another country-never! Their employees and customers are already very angry at them. If they move, watch, it will be beginning of the end – they surrendered, they quit! The Aura will be gone and they will be taxed like never before!” Trump said.
The stocks of Harley-Davidson isn’t performing well in the stock market, HOG stocks which were down nearly 9 percent a few days back are now has fallen 15.6 percent in 2018 on growing trade wars, according to S&P Global Market Intelligence. The American President Donald Trump carried out the tariffs on European steel and aluminum earlier this year, in encouraging the European Union to respond with its own tariff on a motorcycle made in the United States.
By seeing the EU tariffs on imported motorcycles jumping out from 6 percent to 31 percent, Harley-Davidson stated that it is shifting some production overseas.
According to many market experts and financial advisors, there is too much uncertainty surrounding for long-term investors.
It is all because of the big impact of EU tariffs on Harley-Davidson. It is a cost the company wasn’t willing to pay. The Harley-Davidson is facing a lot of headwinds at a time when this iconic company should be at peak performance. Especially, when the economy is doing well, interest rates are fairly low, wages are rising, if the company can’t grow in good times then what would happen if the country hits a recession.
Seeing the market graph of HOG, it is clear to see that from last year, the Harley isn’t doing well and a sudden plunge in stock prices can be seen from January of this year.
Let’s see what’s next and how Harley-Davidson react in its statement of shifting some of its production to overseas. It may be a bad news for the United States but a German economic development agency is courting Harley-Davidson Inc., saying Berlin would be a prime location for the company to locate a motorcycle factory in the European Union.