Harley-davidson profits go into reverse as global trade tariffs bite

TRADE tariffs were to blame for plunging profits at Harley-davidson, the motorcycle manufacturer attacked by Donald Trump for shifting production abroad to avoid export duties.

Pre-tax profits at Milwaukee-based Harley fell 22pc to $426m (£343m) in the first half of the year on revenue 9pc lower at $2.6bn.

Harley said that industry-wide lower demand for motorbikes contributed to the poor performance, with hefty tariffs on Us-built motorbikes sold in the EU and China adding to its troubles.

The company has opened a plant in Thailand to dodge the levies, and expects this to ease the pain as production rises, although winning regulatory approval to ship motorbikes made there had taken longer than expected.

Matt Levatich, chief executive, said Harley’s “More Roads” strategy to attract more bikers was paying off, along with international expansion.

President Trump last year accused Harley of waving a “white flag” when it said it would move some production abroad as tariffs loomed because of his trade war with China and the EU.

A combination of tariffs and falling rider numbers meant Harley sold 129,514 bikes in the first half, down 6.6pc on last time round, though the declines accelerated in the second quarter.

As a result, the company cut its forecast, saying it now expects to ship between 212,000 and 217,000 bikes in 2019, down from the earlier prediction of between 217,000 and 222,000. Meanwhile, the International Monetary Fund has warned that the global economy will only recover if trade wars end and the serious rows between nations are resolved. GDP growth will be slower than previously expected at 3.2pc this year and 3.5pc next year, the IMF said – a cut of 0.1 of a percentage point for each year.

However, the modest rebound in 2020 will only materialise if governments stop scrapping over trade and reach new deals.

“Global growth is sluggish and precarious, but it does not have to be this way because some of this is selfinflicted,” said Gita Gopinath, the IMF’S chief economist.

Governments must urgently address these clashes if they want to restore growth, the IMF warned in its World Economic Outlook update.

The UK economy is set to expand by 1.3pc this year and 1.4pc next year. The 2019 forecast is a 0.1 percentage point upgrade from the spring forecast because the IMF was surprised by the strength of stockpiling activity in the first three months of the year as businesses prepared for the expected March 29 Brexit deadline.

Some of this will unwind, however, as firms run down those stockpiles.