Autos

Harley CEO on Trump trade war: 'Obviously we can't sit by and wait for something to happen'

Key Points
  • Harley was thrown into the spotlight of Trump's trade war last June.
  • The EU tariffs are costing the Wisconsin-based motorcycle manufacturer about $100 million a year, CEO Matt Levatich said.
  • The EU smacked duties on $2.4 billion worth of U.S. products after Trump levied tariffs on steel and aluminum imports from Europe last year.
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Harley-Davidson CEO Matt Levatich on trade, electric bikes and more

As President Donald Trump's international trade war rages on, Harley Davidson is trying to mitigate the damage of retaliatory tariffs the EU placed on U.S. motorcycles that are costing the company about $100 million a year CEO Matt Levatich said Monday.

"Europe is the big issue for the company, about a $100 million a year run rate that we are covering in order to protect our business in Europe, protect our market share, protect our volume, protect the viability of our distribution channel," Levatich said on CNBC's "Squawk Alley."

"Obviously we can't sit by and wait for something to happen, we have to act to make it happen," he added.

Harley was thrown into the spotlight of Trump's trade war last June after the company announced it would move production of its European products out of the U.S. because of the retaliatory tariffs. The company didn't move jobs overseas, instead Harley said it only moved production of EU motorcycles to its plant in Thailand, so U.S. jobs weren't impacted.

However, some "hog" owners said they planned to boycott the company for moving European production, garnering approval from Trump.

Though Levatich said Monday that he believes the company successfully worked to mitigate concern among its customers after Trump approved the boycott, the president's comments "certainly didn't help."

"No company wants comments like that made," Levatich said of Trump's tweet.

Trump later vowed to "reciprocate" against the EU after the company blamed the tariffs, at least in part, for a drop in first-quarter profit.

Trump and international leaders have been locked in a trade skirmish as the president promises to solve what he says are unfair trade practices. The European Union smacked duties on $2.4 billion worth of U.S. products, including motorcycles, after Trump placed tariffs on steel and aluminum imports from Europe last year. As a result, the EU's duties on U.S. products rose from 6% to 31%. The tariffs are set to increase to 56% in 2021 unless the U.S. and European Union can reach a deal.

The EU's retaliatory tariffs have had a direct impact on Harley, changing the way the company makes business decisions, Levatich said. Harley's first-quarter profit in 2019 fell nearly 27%, partly due to the European duties.

Levatich said the company plans to roll out new products "that play very well into strong and growing segments internationally, in particular in Europe." He said its important for the company to have the European distribution channel "to make sure those tariffs will be mitigated if they don't otherwise go away."

Though Trump's initial attack on Harley put political pressure on the company, Levatich said the president's comments didn't harm the U.S. business, adding that Harley holds more than half of the industry's market share in the U.S. He said that the company worked to clarify "what the facts are" and that it needed to find ways to mitigate the impact "until the tariffs go away by other political means."

Correction: This article was updated to correct the amount of money the EU tariffs are costing Harley. It's about $100 million a year.