Harley Davidson is about to be an unintended causality in the President’s growing trade war with the European Union. The company has announced it will be moving some of its iconic motorcycle production out of the U.S. in order to avoid new tariffs imposed by the EU.
The Trump administration announced tariffs on steel and aluminum imports from foreign countries earlier this year, including the European Union. In retaliation, the EU announced last week it would be imposing $3.2 billion in tariffs on American goods. Affected items include orange juice, bourbon, peanut butter, motor boats, cigarettes and denim.
Also included are motorcycles, which will see their tariffs increase from 6% to 31%. The jump will add about $2,200 to the price of the average Harley Davidson bike.
“We did not want to be in this position,” EU trade official Cecilia Malmström said. “The unilateral and unjustified decision of the US to impose steel and aluminum tariffs on the EU means that we are left with no other choice.”
The European Union has also filed a case at the World Trade Organization.
“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option,” Harley Davidson said in a regulatory filing today.
The company said that it will lose as much as $100 million annually under the new tariffs. But, they said, they will not be passing those increases on to dealers or customers.
“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,” the company said.
President Trump criticized the company, albeit mildly, in the wake of the announcement.
“Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse – be patient! #MAGA,” he wrote on Twitter late today.
Harley Davidson makes most of its motorcycles in the U.S. in Wisconsin, Pennsylvania and Missouri, although it announced earlier this year that it was closing its Missouri plant. Harley Davidson has opened factories in India and Brazil in recent years and is opening another in Thailand this year.
The company did not announce which U.S. jobs would be at risk because of the decision to shift production out of the States. Europe is the company second-largest market behind the U.S. In 2017, nearly 40,000 Harleys were sold in Europe compared to about 148,000 in the U.S.