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Harley-Davidson’s supply chain shifts to mitigate tariffs may be only short-term fix

Harley-Davidson CEO Matt Levatich expressed satisfaction with his company’s 2018 move to shift production from the US to Thailand on the company’s first-quarter earnings call. The motorcycle-maker shifted manufacturing from Missouri to Thailand to avoid European tariffs as that market gained importance in its sales volume.

Current mitigation efforts may not last, however. Harley-Davidson is awaiting approval from the EU to lower the import tariff rate for motorcycles from Thailand back down to six per cent. A rate of 31 per cent was enacted last June.

Revenue for the company’s motorcycle segment in the first quarter was down 12.3 per cent year-over-year. Executives are more optimistic about the retail environment in the remainder of 2019, but improving consumer trends are cold comfort in a shifting trade environment that seems to get worse for Harley at every turn. The company said in January it expects to pay $100m in tariffs this year.

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