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Harley-Davidson Will Shift Manufacturing Overseas To Avoid Tariffs

Harley-Davidson Will Shift Manufacturing Overseas To Avoid Tariffs

In a stock market filing, the company said the EU's reaction to Donald Trump's steel tariffs, which will add $2,200 (£1,657) to the average cost of a motorcycle exported from the United States to Europe, will result in up to $100m of extra charges over the next couple of years.

The company, which sold almost 40,000 motorcycles in Europe a year ago, said it planned to absorb those costs rather than pass them on to customers and risk damaging sales.

Harley sold 40,000 motorbikes in Europe a year ago, its second-largest market after the US.

Harley-Davidson said in a statement: 'Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally. In response, Canada and Mexico enacted tariffs of their own, and last week, the European Union levied tariffs on some USA goods, specifically targeting iconic American brands like Harley-Davidson and Kentucky bourbon.

Now Harley joins iconic American companies including Levi Strauss & Co and even Germany's Daimler in getting caught in the middle of Trump's trade skirmishes with major trading partners.

In early 2017, President Donald Trump met with executives from Harley-Davidson who he thanked for "building things in America".

The EU's levies are only the latest blowback Harley has faced from Trump's trade policies.

Citing tariffs tied to escalating tension between Trump and the European Union, the iconic motorcycle maker will further retrench its United States operations.

The iconic brand said the move was prompted by the financial burden of tariffs levied against USA products.

Harley-Davidson claimed Monday that the EU's action increased the tariffs on its motorcycles "from six percent to 31 percent". That will add an estimated $90 million to $100 million in costs annually.

Harley-Davidson's move is already drawing the ire of tariff critics, including members of the president's own party.

Trump, however, deflected blame today via a tweet, citing taxes as being nothing more than an excuse on the part of Harley Davidson.

United Steelworkers, a labor union representing some of the motorcycle maker's U.S. employees, said Monday that Harley-Davidson had long since begun to shift its manufacturing operations overseas.

It said the tariffs would add, on average, $2,200 (£1,660) to each bike exported to Europe from the U.S. as the import tax increases from 6% to 31%.

Harley-Davidson earlier said making bikes for the European market would be transferred to other countries.

The firm said that if it stayed in the USA then it would result in an incremental cost of about 2,200 dollars per motorcycle sold in Europe. It was also plants in Pennsylvania and Missouri, along with facilities in Brazil, India and Australia.

The company said that it will not raise its prices because that would cause an immediate and long-lasting effect on sales in Europe.

An employee tends to Harley Davidson Motorcycles at the Boston Harley Davidson dealership in Revere, Massachusetts, USA 25 June 2018.

But that status made the company a target for European Union retaliation along with bourbon and blue jeans.

The company said the EU's tariff increase - to 31%, from the current 6% - would increase the cost of every motorcycle shipped from the U.S. to Europe by $2,200.

Other US products caught up in European Union tariffs include cranberries, peanut butter, playing cards and whiskey.