Citing the high costs of new European tariffs, Harley-Davidson announced Monday it would move some of its United States motorcycle production abroad.
The Milwaukee-based motorcycle manufacturer sold nearly 40,000 bikes in the European Union, its largest market outside the U.S., last year. But because of President Donald Trump’s trade war with the EU, tariffs recently grew from 6 percent to 31 percent, adding an additional $2,200 to each motorcycle exported from America.
“Harley-Davidson believes 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, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses,” the company said a statement.
The EU imposed retaliatory tariffs last week on $3.4 billion worth of U.S. products like bourbon, motorcycles and orange juice.The new duties were a direct response to President Trump’s decision to increase fees on aluminium and steel coming from Europe. In March, the president tweeted that “trade wars are good, and easy to win.” Since then, he’s increased tariffs on the EU, Mexico, Canada and China, and promised additional fees in response to any retaliation.
Harley-Davidson, which Trump has cited in the past as a company hurt by U.S. trade regulation, said the increased tariffs would cost it an extra $30 million to $45 million in 2018. The company did not comment on how many jobs would be shifted away from the U.S., but said that it would take between nine and 18 months to move production away from Wisconsin.
“Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally,” said the company. “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. Europe is a critical market for Harley-Davidson.”
The European Union and China have now joined together to discuss and update global trade policies, European Commission vice president Jyrki Katainen announced Monday. “I feel really we are making progress…both China and the EU believes in multilateralism and a rules-based world order,” Katainen told CNBC.
President Trump will reportedly announce a new set of restrictions on trade with China this week. He has already imposed $50 billion in tariffs on China and threatened another $400 billion. Now he is expected to restrict technologies sold to China, and Chinese investment in U.S. companies.