June 25 (UPI) — Harley-Davidson Inc. said Monday it will move production of its motorcycles destined for European Union customers to factories in other countries.
The action comes in response to tariffs the EU imposed on motorcycles made in the United States. The tariffs, effective on June 22, are retaliation for tariffs which the administration of President Donald Trump has imposed on EU shipments of steel and aluminum to the United States.
In a Securities and Exchange Commission filing, Harley-Davidson noted that the 31 percent tariff, up from six percent, would add about $2,200 to the cost of each motorcycle. The tariff’s impact could reach $100 million per year, it said. About 16 percent of the Milwaukee-based company’s revenue comes from European sales of motorcycles, which reached nearly 40,000 units in 2017. It competes, in Europe, with European and Japanese-made motorcycles which are not subject to the steep tariff.
“Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses,” the company said in the filing. It added that it would not raise the suggested retail price of its products, noting that passing the cost of the tariffs to customers would have an “immediate and lasting detrimental impact.”
The company has assembly plants in the United States, India and Brazil, and will open a new plant in Thailand in the summer. Some of its motorcycles sold in Italy, Portugal and Spain are made in India.
Trump has regularly pointed to Harley-Davidson as an example of a U.S. business that harmed by trade barriers, but the company has said that tariffs would negatively impact sales, the Milwaukee Journal-Sentinel reported on Monday.
Shares of Harley-Davidson fell 2.7 percent in pre-market stock trading on Monday.