Harley-Davidson to shift some production out of U.S. over European Union tariffs

Last week, the European Commission said it would start charging import duties of 25 percent on a range of US products after Washington imposed tariffs on EU steel and aluminum at the start of June.

To prevent further long-term damage to the company's revenues, it said the production of motorcycles for European Union destinations needs to switch from the USA to its worldwide facilities.

Harley-Davidson, facing rising costs from new tariffs, will begin shifting the production of motorcycles heading for Europe from the U.S.to factories overseas.

Wisconsin-based Harley-Davidson has assembly plants in Australia, Brazil, India and Thailand.

The European tariffs have jumped from 6 percent to 31 percent, the company said.

The shares dropped 2.7 percent to $43 in early USA trading.

"In 2017, almost 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the European Union countries is second only to the U.S.". Besides its US plants, Harley-Davidson maintains manufacturing facilities in Australia, Brazil, India and Thailand, according to its website.

Harley-Davidson felt that if it passed on the cost increase to dealers and customers it would have an immediate negative impact on its business in the European Union, including threatening the sustainability of its dealers' businesses. For that reason, Harley said it would absorb the additional costs.

The price of motorcycles will not go up in response to the tariffs, the company said. They are a response to the Trump administration's tariffs on steel and aluminum imports from Europe. "On a full-year basis, the company estimates the aggregate annual impact [due to the tariffs] to be approximately $90 [million] to $100 million".

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