Harley-Davidson, the legendary producer of all-American motorbikes, said Monday it will shift some of its production outside the U.S. to avoid tariffs the EU has imposed on U.S. exports in response to American duties on steel and aluminum.
“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 company said in an official announcement.
The company said the EU retaliatory tariffs of 25 percent would mean a motorbike shipped from the U.S to Europe would now face a tariff of 31 percent, up from 6 percent, leading to an average cost increase of $2,200 per motorcycle.
This is the first announcement of a shift of production outside of the U.S. in reaction to U.S. President Donald Trumps trade war, and it follows a profit warning from carmaker Daimler, which said its factories in the U.S. would be hit by Chinese retaliation.
Europe is the biggest export market for Harley-Davidson, which said that “in 2017, nearly 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the EU countries is second only to the U.S.”
Harley-Davidson said it plans to bear increased costs to avoid a decrease in sales in the EU. “On a full-year basis, the company estimates the aggregate annual impact [due to the tariffs] to be approximately $90 [million] to $100 million.”