EU tariffs drive Harley-Davidson to move manufacturing out of US

Motorcycle group estimates fivefold increase in EU tariffs will cost it up to $100m

A biker rides his Harley-Davidson during a parade at the “Hamburg Harley Days” in Hamburg, Germany. The company plans to shift some production out of the United States in response to retaliatory European Union tariffs. Photograph: Fabian Bimmer/Reuters

A biker rides his Harley-Davidson during a parade at the “Hamburg Harley Days” in Hamburg, Germany. The company plans to shift some production out of the United States in response to retaliatory European Union tariffs. Photograph: Fabian Bimmer/Reuters

 

Harley-Davidson plans to shift some production of its iconic motorcycles out of the United States in response to retaliatory European Union tariffs, as US 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 US bikes to 31 per cent from 6 per cent on June 22nd, 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 on to customers.

In the meantime, the company said it is planning to increase production in international plants over the next 18 months. While it is committed to making motorcycles in the US, it has no other choice in a market where it sold almost 40,000 bikes last year. Besides its US 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 per cent to $43 in early US trading. – Bloomberg