Harley Davidson Says Tariffs Will Cost it This Much This Year

Motorcycle company Harley Davidson reported its earnings this week and announced just how much tariffs around the world would cost the company.

The company’s chief financial officer John Olin said that they would cost at least $40 million to Harley Davidson this year to cover them. Tariffs will increase the costs of aluminum and steel by $15 to $20 million and EU tariffs would cost about $25 million.

Olin said after the company reported its third-quarter earnings, “Our expectations for the impact of recently enacted tariffs includes incremental costs of approximately $15 million to $20 million for steel and aluminum and approximately $25 million for EU tariffs,” Olin said. “Additionally, China increased its tariffs volume on foreign motorcycles produced in the United States by 25 percentage points and the U.S. has increased tariffs on certain products imported from China. We believe this will increase our 2018 cost by approximately $3 million. In total we now expect to incur approximately $43 million to $48 million of increased costs related to the tariffs during 2018.”

“We never imagined moving production of our European customers out of the United States and here we are,” Olin also added.

“For years, the North American heavyweight motorcycle industry grew at double-digit rates due to low interest rates, a strong economy, a rising stock market, and the aging of the baby boomers. However, in recent years and going forward, we expect a much slower growth pattern for the U.S. motorcycle industry,” remarked Edward Jones Co. analyst Robin Diedrich.

The world’s largest manufacturer of heavyweight motorcycles earned $113.9 million in the three-month period ended Sept. 30. This was a jump of 67 percent compared to the same period a year earlier. The company earned 68 cents a share, compared to 40 cents in the quarter a year ago. Revenue of $1.32 billion was up nearly 15 percent from the year-ago period.

Disclaimer: We have no position in Harley-Davidson Inc. (NYSE: HOG) and have not been compensated for this article.