The daily business briefing: June 26, 2018
Harley-Davidson moves some production overseas to dodge retaliatory tariffs, rising trade war fears rattle investors, and more
Harley-Davidson says tariffs forcing some production overseas
Harley-Davidson announced Monday that it planned to move production of motorcycles to be sold in the European Union to overseas factories due to President Trump's escalating trade war. The iconic American motorcycle manufacturer said that the EU's 25 percent tariff, imposed to retaliate against Trump's tariffs on imported steel and aluminum, would increase the average cost of its motorcycles in Europe by about $2,200. The unspecified number of manufacturing jobs will reportedly be moved to plants in India, Brazil, and Thailand, marking a setback for Trump's "America First" policy. Trump, who has touted Harley-Davidson as a domestic-manufacturing success story, accused the company of using the tariffs as "an excuse" for moving production overseas.
U.S. stocks steady after Monday plunge over trade fears
U.S. stock futures showed little change early Tuesday, following a sharp drop on Monday widely blamed on rising trade tensions. The Dow Jones Industrial Average dropped by 1.3 percent on Monday. The S&P 500 fell by 1.4 percent, and the tech-heavy Nasdaq Composite plunged by 2.1 percent, after President Trump threatened to pile further trade measures, on top of tariffs he has already imposed, against any country that doesn't dismantle trade barriers against U.S. goods. "I think we're slowly slipping into a more serious stage in the trade war," said Ethan Harris, head of global economics research at Bank of America Merrill Lynch. "People are beginning to realize there's no sign of de-escalation in sight."
GE reportedly plans to spin-off health-care business
General Electric Co. shares rose by 1.8 percent in pre-market trading on Tuesday after a report that the industrial conglomerate planned to spin off its health-care business and sell its stake in oil services company Baker Hughes. The report came after a year-long strategic review by CEO John Flannery. GE already has cut its dividend and moved toward shedding other businesses in a turnaround effort. On Monday, GE announced that private equity firm Advent International had won the bidding for its distributed power business with a $3.25 billion offer. That deal is just one of several billion-dollar-plus divestitures, which saw GE's stock drop to a multi-year low after last week's news that it was being dropped from the benchmark Dow Jones Industrial Average stock index.
SEC fines Wells Fargo over advice that hurt investors
The Securities and Exchange Commission said on Monday that Wells Fargo "improperly" encouraged clients to actively trade high-fee bond-like debt products between 2009 and 2013, even though the investments were designed to be held until they matured. The bank then told the clients to buy new ones, without fully explaining the "substantial fees" and "reduced" returns that would result from the moves. Wells Fargo Advisors, the bank's brokerage division, agreed to pay a $4 million penalty and return $930,377 it made on the gains, plus $178,064 of interest. Wells Fargo, which has faced a series of misconduct allegations over the last two years, said it "cooperated fully" with the SEC, but it neither admitted nor denied the allegations.
Walgreens pharmacist denies Arizona woman medical-abortion drug
The Arizona Board of Pharmacy said Monday it would investigate the case of a Walgreens pharmacist's refusal to fill a customer's prescription for a medical-abortion drug. The woman, Nicole Arteaga, posted on Facebook that her doctor said her baby's development had stopped and she would miscarry. Arteaga chose the drug, misoprostol, over surgery, but the pharmacist turned her away, citing his "ethical beliefs." Arteaga was able to get the medication at another Walgreens. The drug-store chain has apologized to Arteaga. Company policy is to serve customer needs while letting pharmacists "step away" from filling a prescription if they have a "moral objection." Arizona is one of six states that let pharmacists decline to fill prescriptions on religious or moral grounds.