"To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for European Union destinations from the USA to its worldwide facilities to avoid the tariff burden", the company said in a regulatory filing.
Each motorcycle will cost an average of US$2,200 extra after the European Union raised its tariff on imported United States bikes to 31 percent from 6 percent on June 22, the Milwaukee-based manufacturer said Monday in a regulatory filing.
The maker of the iconic American motorcycle said in a regulatory filing Monday that European Union tariffs on its motorcycles exported from the USA jumped between 6 percent and 31 percent, which translates into an additional, incremental cost of about $2,200 per average motorcycle exported from the U.S.to the EU.
The EU implemented tariffs on just over $3 billion worth of U.S. goods in response to Trump's decision to hit steel and aluminum imports with tariffs.
Trump praised Harley-Davidson as an "American icon, one of the greats" and expressed confidence the company would expand United States manufacturing under his administration.
The office of Speaker of the House Paul Ryan, R-Wis., whose congressional district sits less than an hour south of the company's headquarters, was additionally critical of the trade stand-off.
Mr. Trump blamed past US leaders for the simmering conflict over trade.
At the time, the company said it was moving manufacturing there to avoid a different tariff: this one being the 60% duty levied on Thai imports. He further praised the executives "for building things in America" and predicted the company would expand its operations during his administration. The affected American motorcycle brands will certainly be Harley-Davidson and Indian Motorcycle, which will see higher sticker prices in Europe, and is certain to affect sales.
The Dow fell by more than 300 points on Monday amid growing worries about trade.
"Harley-Davidson expects ramping up production in global plants will require incremental investment and could take at least 9 to 18 months to be fully complete".
Harley-Davidson shares have lost about 9 percent since early March when the trade skirmish between the United States and the European Union started, and are down over 18 percent since end-December 2017. "Taxes just a Harley excuse - be patient!"
The move is among the first signs that Trump's use of tariffs, which he has promoted as a way to boost employment in the steel and aluminum industries, is hurting other American businesses.
Europe is Harley's second biggest market outside the USA and sold nearly 40-thousand motorcycles in the Europe past year. If Nafta were to break up, and change that dynamic, it would likely hurt US companies. Analysts project the company will earn about US$591 million this year on US$5 billion of revenue.
After early steep declines, markets pared losses after White House trade adviser Peter Navarro softened the country's stance on investment restrictions. The company already has plants in Australia, Brazil and India, and it will soon open another facility in Thailand.