Harley-Davidson, the U.S. motorcycle manufacturer, said Monday that it was shifting some of the production of its bikes outside the United States to avoid European Union tariffs imposed as part of a widening trade dispute.
The announcement, made in a public filing, is an early sign of the financial cost to companies on both sides of the Atlantic as the United States and Europe impose tariffs and counter-tariffs on each other.
Last week, the European Union imposed penalties on $3.2 billion worth of U.S. products, many of which are produced in areas that form the heart of President Donald Trump’s political base, in response to steel and aluminum tariffs added by the White House. Harley-Davidson, headquartered in Wisconsin, is the home state of the House Speaker Paul Ryan.
Harley-Davidson said Monday that EU tariffs on its motorcycles had increased to 31 percent from 6 percent. It estimated that the higher tariffs would add about $2,200 on average to every motorcycle exported from the United States to the bloc, so it said it would move the production of bikes bound for Europe outside the United States.
The company sold about 40,000 new motorbikes last year in Europe, equivalent to a sixth of its worldwide sales, making the region its most important market after its home country.
"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," it said in the filing.
Harley-Davidson said the increase in tariffs would cost it an extra $30 million to $45 million for the rest of 2018. It said shifting its production outside the United States would take nine to 18 months. The company said it planned to keep prices for EU customers steady while that shift was in progress, meaning it would absorb any tariff costs. It did not say how jobs in the United States would be affected.
The company, which is to give more details on the move next month when it reports second-quarter earnings, has been moving some production overseas for years, somewhat eroding its image as an iconic American brand.