Harley-Davidson is planning to move production of its motorcycles to the US due to Europe’s increased tariffs on motorcycle imports.
According to the motorcycle production company, the new tariffs will add $2,200 (£1,657) to the average cost of bike exported to Europe from the US.
“Harley-Davidson expects ramping up production in international plants will require incremental investment and could take at least nine to 18 months to be fully complete,” said the group in a stock market filing.
The EU’s increase in tariffs is in retaliation to Trump’s 25 percent tariff on steel and a 10 percent tariff on aluminium imports from countries, including those in the EU.
Trump responded to the EU’s tariffs by threatening to impose tariffs on European cars.
He said in a tweet: “If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!”
Harley-Davidson said the group “maintains a strong commitment to US-based manufacturing which is valued by riders globally. 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.”
“In 2017, nearly 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the EU countries is second only to the US.”
“Harley-Davidson believes the tremendous cost increase, if passed on to 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.”
“Therefore, Harley-Davidson will not raise its manufacturer’s suggested retail prices or wholesale prices to its dealers to cover the costs of the retaliatory tariffs,” the group added.
Shares in the group (NYSE: HOG) fell three percent in early trading on Monday.