Harley-Davidson to shift some production out of USA over European Union tariffs

A business like Harley-Davidson gets hit at both ends, as American tariffs on steel and aluminum imports drive up the cost of raw materials used to build motorcycles and retaliatory European Union tariffs make it more hard to sell their products.

The European Union on Friday began rolling out tariffs on American imports like bourbon, peanut butter and orange juice.

"Harley-Davidson maintains a strong commitment to USA -based manufacturing which is valued by riders globally", the company's filing said. Setting up production facilities overseas will take between nine and 18 months, the company said.

"To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for European Union destinations from the U.S.to its worldwide facilities to avoid the tariff burden", the filing from the company reads.

Shares of Harley-Davidson had fallen 6.4 percent to $41.37 in early afternoon trading.

The disclosure Monday from the Milwaukee-based brand comes just three days before Trump is expected to travel to the Milwaukee area for a ceremonial groundbreaking at the first USA factory location of Asian electronics manufacturing giant Foxconn.

Harley-Davidson has been relying on Europe and other worldwide markets to help offset declining sales in the USA, where baby boomers that have long bought the vehicles are aging and younger consumers are not taking to the motorcycles in a big way.

Harley-Davidson's stock, and the Dow Jones as a whole, dipped Monday morning as trade-war fears mounted. The company's USA factories are in York, Pa.; Kansas City, Mo., and Menomonee Falls, Wis.

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Lovely said Harley and other companies face retaliatory tariffs in Europe and elsewhere if they try to export products.

In February, Harley-Davidson announced the recall of 251,000 motorcycles due to possible brake failures, a move estimated to have cost the company $25 million. Yet Harley-Davidson had previously warned that the escalating tariffs spat would lead to an even higher burden for the company.

The company is already struggling with falling sales. That makes the market second to the US.

The International Association of Machinists and Aerospace Workers (IAM), the union that represents Harley employees in three United States plants, said the offshore move had been planned long in advance.

Trump praised Harley-Davidson as an "American icon, one of the greats" and expressed confidence the company would expand USA manufacturing under his administration. But since then the company has been counting the costs of his trade policy.

Harley-Davidson opened plants in India and Brazil in recent years and is opening another in Thailand this year.

The Trump administration's tariffs have tended to target raw materials like steel or aluminum, or building block materials like solar modules. "This is further proof of the harm from unilateral tariffs", said AshLee Strong, a spokeswoman for House Speaker Paul Ryan of Wisconsin.

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