Harley-Davidson to take big hit from European Union tariffs

Marco Green
June 25, 2018

Harley-Davidson plans to shift some motorcycle production away from the U.S. to avoid the "substantial" burden of European Union tariffs.

For motorcycles, the European Union is raising its 6% tariff to 31%.

Harley-Davidson plans to shift the production of some of its bikes out of the United States in response to Europe's new tariffs on motorcycle imports.

Each motorcycle will cost an average of $2,200 extra after the European Union raised its tariff on imported US bikes to 31 percent from 6 percent on June 22, the Milwaukee-based manufacturer said Monday in a regulatory filing.

"Harley-Davidson maintains a strong commitment to USA -based manufacturing which is valued by riders globally", the company said in prepared remarks.

The price of motorcycles will not go up in response to the tariffs, the company said. For that reason, Harley said it would absorb the additional costs.

"Harley-Davidson believes the tremendous cost increase, if passed on to its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers' businesses".

The company expects the incremental cost for the rest of 2018 to be $30 million to $45 million.

The company is already struggling with falling sales. The company's USA factories are in York, Pa.; Kansas City, Mo., and Menomonee Falls, Wis. USA motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession.

European officials last week imposed stiff tariffs on a wide range of USA -made goods sold within the European Union. Daimler produces vehicles in the U.S. The response came to President Trump's recent decision to slap tariffs on European imports.

The Wall Street Journal reported that the Trump administration plans to impose curbs on Chinese investment in American technology companies and high-tech exports to China.

Other reports by Click Lancashire

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