In response to tariffs imposed by the European Union, Harley-Davidson says it will move production of motorcycles made for markets overseas out of the United States.
Harley-Davidson announced its intentions in regulatory filings posted to the company’s website on Monday, June 25. This news comes less than a week after the EU retaliated to the Trump administration by imposing tariffs on American imports such as motorcycles, orange juice, bourbon, boats, cigarettes and denim products to the tune of $3.4 billion.
The EU’s tariffs were a direct response to the Trump administration’s tariffs placed against steel and aluminum exports from Europe.
The company reports that the tariffs on motorcycles exported from the U.S. to the EU from 6 percent to 31 percent, which it says will cost an extra $2,200 per motorcycle made stateside and sent to the EU market.
The Associated Press reports that while President Donald Trump is pointing to Harley as a prime example of an American business as those hurt by trade barriers, the bike maker has regularly warned against imposing tariffs.
Harley says in the filings that it will not raise MSRPs or wholesale dealership prices to make up for the losses connected to tariffs. The Milwaukee-based company reports that the full-year effect from the tariffs will have an impact of $90 to $100 million.
“To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the U.S. to its international facilities to avoid the tariff burden,” the filing from the company reads.
“Harley-Davidson expects ramping up production in international plants will require incremental investment and could take at least 9 to 18 months to be fully complete. Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally.
“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe.”
The company reports it sold about 40,000 motorcycles in the EU market in 2017, and that “Europe is a critical market for Harley-Davidson.” Harley reports it will share more information on this shift in its second-quarter conference call set for 8 a.m. July 24.
A.P. reports the company was already having a rough 2018 as sales have plummeted in recent years. Earlier this year, Harley-Davidson announced it would consolidate its Kansas City, Missouri facility into its existing York, Pennsylvania one.