Milwaukee: Harley-Davidson, up against spiraling costs from tariffs, will begin shifting the production of motorcycles headed for Europe from the US to factories overseas.
The European Union on Friday began rolling out tariffs on American imports like bourbon, peanut butter and orange juice.
The EU tariffs on $3.4 billion worth of US products are retaliation for duties the Trump administration is imposing on European steel and aluminum. Harley-Davidson Inc. sold almost 40,000 motorcycles in the Europe Union last year, generating revenue second only to the United States, according to the company.
The maker of the iconic American motorcycle said in a regulatory filing Monday that EU tariffs on its motorcycles exported from the US jumped between 6 percent and 31 per cent. The company said it expects the tariffs will result in an incremental cost of about $2,200 per average motorcycle exported from the US to the EU.
“Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally,” the company said in prepared remarks.
“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.”
Harley-Davidson will not raise prices to cover tariff costs
- The company said that it will not raise its prices to avert “an immediate and lasting detrimental impact” on sales in Europe. Harley will instead absorb a significant amount of the cost in the near term.
- Company shares slumped almost 3%. Other companies heavily reliant on aluminum and steel fell as well. Harley-Davidson said that shifting targeted production could take at least nine to 18 months.
- The vice president of the European Union’s governing body said that Europe and China will form a group aimed at updating global trade rules to address technology policy and government subsidies.
Incremental cost to be $45 million
- The company estimated the incremental cost for the rest of 2018 to be $30 million to $45 mn.
- It anticipates the cost for the rest of the year to be approximately $30 mn to $45 mn.
- The EU tariffs on $3.4 billion worth of US products are retaliation for duties the Trump administration is imposing on European steel and aluminum.