By Bloomberg
June 25, 2018

Harley-Davidson Inc. plans to shift some production of its iconic motorcycles out of the U.S. in response to retaliatory European Union tariffs, as President Donald Trump’s trade war ripples back to American companies.

Each motorcycle will cost an average of $2,200 extra after the European Union raised its tariff on imported U.S. bikes to 31 percent from 6 percent on June 22, the Milwaukee-based manufacturer said Monday in a regulatory filing. That’s expected to add up to a burden of $90 million to $100 million annually, which Harley-Davidson will absorb rather than pass extra costs on to customers.

In the meantime, it’s planning to increase production in international plants over the next 18 months. While it’s committed to making motorcycles in the U.S., it has no other choice in a market where it sold almost 40,000 bikes last year. Besides its U.S. plants, Harley-Davidson maintains manufacturing facilities in Australia, Brazil, India and Thailand, according to its website.

“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 said.

The shares dropped 2.7 percent to $43 in early U.S. trading.

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