Harley to move production out of U.S.

Says EU’s retaliatory tariffs will cost company $90 million to $100 million a year

Beijing hit back with tariffs on an equal amount of U.S. goods, targeting iconic products such as Harley-Davidson motorcycles, dump trucks and asphalt, among hundreds of others.

Harley-Davidson Inc. said on Monday it would move production of motorcycles shipped to the European Union from the United States to its international facilities and forecast the trading bloc’s retaliatory tariffs would cost the company $90 million to $100 million a year.

The shift in production is an unintended consequence of U.S. President Donald Trump’s administration imposing tariffs on European steel and aluminum early this month, a move designed to protect U.S. jobs.

In response to the U.S. tariffs, the European Union began charging import duties of 25% on a range of U.S. products including big motorcycles like Harley’s on June 22.

In a regulatory filing, the Milwaukee, Wisconsin-based company said the retaliatory duties would result in an incremental cost of about $2,200 per average motorcycle exported from the U.S. to the European Union, but it would not raise retail or wholesale prices for its dealers to cover the costs of the tariffs. The company expects the tariffs to result in incremental costs of $30 million to $45 million for the rest of 2018, the filing said.

“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,” the company said.

Struggling to overcome a slump in U.S. demand, Harley has been aiming to boost sales of its iconic motorcycles overseas to 50% of total annual volume from about 43% currently.

Kansas plant closure

In January, the company announced the closure of a plant in Kansas City, Missouri as part of a consolidation plan after its motorcycle shipments fell to their lowest level in six years.

In 2017, Harley sold nearly 40,000 new motorcycles in Europe which accounted for 14% of the company’s sales last year. The revenues from EU countries were second only to the U.S. Harley said ramping-up production at its international plants will require incremental investments and could take at least nine to 18 months.