The EU decision to place tariffs on various US products, including Harleys, was in retaliation to the USA imposing tariffs on steel and aluminum exports from the EU into the U.S. These EU tariffs came in retaliation for steep tariffs that the Trump administration has imposed on the EU.
The company said in a regulatory filing Monday that European Union tariffs on its motorcycles exported from the US jumped between 6 percent and 31 percent, adding about $2,200 per average motorcycle exported from the U.S.to the EU.
The manufacturer estimates that each bike will cost approximately $2,200 more to bring to Europe.
The company said it would not raise retail or wholesale prices for its dealers, and expects the tariffs to result in incremental costs of US$30 million to US$45 million for the rest of 2018.
Harley-Davidson said it would raise investment in its worldwide plants, though it did not say which ones, adding that it expected the increase in production to take nine to 18 months.
Harley-Davidson now has overseas manufacturing plants in Brazil, India and Australia and is building a plant in Thailand.
In 2017, the company sold 40,000 bikes in Europe, its second largest market, CNN report, compared to the 148,000 customers who bought two-wheel vehicles in the USA from Harley-Davidson. Outside the United States, Harley-Davidson already has or is constructing facilities in Brazil, Thailand, Australia and India, with its site in India producing a number of models for the European market.
Harley-Davidson, which has been focused on expanding its overseas sales, said it remained committed to U.S. manufacturing.
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Motorcycles were hit with a whopping 31 percent tariff, a penalty that amounted a 25 percent increase in costs.
The company, which is to give more details on the move next month when it reports second-quarter earnings, has been moving some production overseas for years, somewhat eroding its image as an iconic American brand.
"We are now assessing the potential impact on our U.S. facilities", said Harley-Davidson spokesman Michael Pflughoeft.
A motorcycle is seen at the Harley-Davidson Museum in Milwaukee on August 31, 2013. A trade war, we'd like to remind you, that he promised would be easy to win.
He says the ultimate goal should be no tariffs.
And U.S. companies are starting to see some of the less desirable consequences. According to Harley Davidson, Europe accounts for around 16 percent of all motorcycle sales.
White House press secretary Sarah Huckabee Sanders defended Trump's trade policies Monday during a press briefing. To avoid this cost, the country will shift to countries where there are lower or no tariffs.
In response, the European Union hit the US with tariffs on $3.2 billion worth of American products, including motorcycles.
"On a full-year basis, the company estimates the aggregate annual impact due to the European Union tariffs to be approximately $90 to $100m".
The United States says it is imposing the tariffs on steel and metal worldwide in order to protect America's metal industries.