Harley-Davidson to shift production overseas to avoid EU tariffs

Harley-Davidson will move some production out of US after retaliatory tariffs

In a stock market filing, the company said the EU's reaction to Donald Trump's steel tariffs, which will add $2,200 (£1,657) to the average cost of a motorcycle exported from the United States to Europe, will result in up to $100m of extra charges over the next couple of years.

But rather than hike prices in the US, the company said it would absorb the cost in the short term ― projected to be some $30 million to $45 million through this year― and shift some production to global factories in coming months.

Passing that on to dealers or customers would cause an "immediate and lasting detrimental impact" on the company's business in its second-largest market, so it'll bear the brunt of the expense.

"So thank you, Harley-Davidson, for building things in America", Trump said at the time.

The company reported $5.65 billion in revenues past year and Europe is its largest overseas market, with nearly 40,000 customers buying motorcycles there in 2017. Harley fell 2.2% on Friday as European Union tariffs against Harley took effect. The company already has plants in Australia, Brazil and India, and it will soon open another facility in Thailand. For that reason, Harley said it would absorb the additional costs.

The company expects the tariffs to result in incremental costs of $30 million to $45 million for the rest of 2018, the filing said.

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The disclosure reveals the mounting cost of the President Trump's confrontational trade policy and, in particular, his controversial decision to justify Trump tariffs on USA allies based on national security grounds.

"Increasing worldwide production to alleviate the European Union tariff burden is not the company's preference, but represents the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe", the company said in the filing.

Quartz reports that the overall cost to Harley Davidson is expected to reach $100 million.

Europe is too important of a market for Harley to neglect. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements.

The decision is a blow to the Trump administration, which has defended its imposition of tariffs on the European Union as part of a strategy to boost jobs in the US. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward.

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