Harley-Davidson Moving Some Production Overseas

The trade policy of President Donald Trump is hurting motorcycle maker Harley-Davidson.

Some of its motorcycle production for its customers in Europe will be moved by the company out of the U.S. to avoid retaliatory tariffs by the European Union.

The move by Harley-Davidson is one of the most direct evidences to date that the trade fights taking place between the U.S. and other nations have consequences for companies in the U.S. Harley-Davidson announced that it could lose up to $100 million annually if nothing were done.

In one of its regulatory filings Monday, Harley-Davidson said that increasing production outside the U.S. would alleviate the tariff burden from the EU is not the preference of the company but is its only sustainable options. Stock at Harley-Davidson plunged by 6% on the news.

In a tweet during the afternoon, Trump expressed his surprise that the motorcycle maker, of all companies, would wave the “White Flag” prior to any others. Trump added that taxes were just an excuse for Harley.

The EU started imposing tariffs last Friday on American goods worth $3.2 billion including motorcycles, peanut butter, orange juice, motorboats, denim, cigarettes and bourbon.

The tariffs come in response to the tariffs the White House administration imposed on aluminum and steel imports coming from Europe.

The tariff on motorcycles was raised by the EU from 6% to 31% and that makes each bike cost approximately $2,200 more to export, said the motorcycle maker.

The company has not raised the prices of their bikes for retailers or customers.

Instead it is going to each between $30 million and $45 million for the remainder of 2018 and $90 million to $100 million each year.

Harley-Davidson did not announce if any jobs were at risk. The company, which is based in Milwaukee, employs over 6,000 globally. A company spokesperson said that the company was currently assessing any possible impact this would have on jobs.

Most of its bikes are made in the U.S. at plants in Missouri, Pennsylvania and Wisconsin.

Europe is the company’s second biggest market trailing just the U.S. Last year, close to 40,000 customers in Europe purchased new Harley. In comparison, 148,000 new bikes were sold in the U.S. in 2017.

Nevertheless, Europe has been more and more important each year to Harley-Davidson as sales in the U.S. slump. U.S. revenue from motorcycles dropped for Harley by 8.5% since 2016, but in Europe the drop was just 0.4%.