The EU imposed retaliatory tariffs last week on $3.4 billion worth of USA products like bourbon, motorcycles and orange juice.The new duties are in direct response to President Trump's decision to increase fees on aluminium and steel coming from Europe. Moving production to overseas factories is expected to require nine to 18 months, so in the near-term Harley-Davidson will absorb the costs of European Union tariffs, the company said in a regulatory notice.
"Harley-Davidson expects ramping up production in worldwide plants will require incremental investment and could take at least nine to 18 months to be fully complete", the company said.
Of course, Harley-Davidson has the ability to relocate some of it's manufacturing overseas because it's a global brand that sold more than 40,000 motorcycles to European consumers past year.
"Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region", the company said.
The EU's tariffs retaliating against Trump's steel and aluminum levies will cost Harley about US$2,200 per bike shipped to Europe, according to a Monday filing.
Harley stock was down 6.6% on Monday afternoon.
Trump hosted chief executive officer Matt Levatich and other Harley executives and union leaders for a White House listening session in February 2017 and hailed the motorcycle manufacturer as "a true American icon" and "one of the greats".
Tech entrepreneurs are also concerned that the tariffs make it harder to invent the kinds of new products that drive US innovation.
The United States says it is imposing the tariffs on steel and metal worldwide in order to protect America's metal industries.
The EU's tariffs primarily affect products made in Republican-majority states and could threaten Trump's party in the November midterm elections, reports the Independent.
It anticipates the cost for the rest of the year to be approximately $US30 million ($40 million) to $US45 million ($61 million).
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Trump praised Harley-Davidson as an "American icon, one of the greats" and expressed confidence the company would expand United States manufacturing under his administration.
It's true that Trump fought hard for Harley-Davidson, especially so in India.
The company claimed the EU's action increased the tariffs on its motorcycles from six percent to 31 percent. In the near term, Harley-Davidson will instead absorb most of the cost of moving the production of motorcycles overseas.
Mr. Trump blamed past US leaders for the simmering conflict over trade.
Harley Davidson, based in Milwaukee, is now planning to move the production of some of its motorcycles overseas.
Harley-Davidson did not immediately return a request for comment. Harley-Davidson has plans to open another facility in Thailand for the same reason. It's unclear at this stage where production outside of the United States will be carried out. The European Union responded by placing tariffs on bourbon whiskey, jeans, and motorcycles, as Trump's approach to trade negotiations quickly turned into what many fear is becoming an worldwide trade war.
Europe represents Harley's No. 2 market, after the United States, with sales previous year approaching 40,000 units.
"Even before the EU's announcement, Harley made the decision to close its plant in Kansas City and has manufacturing facilities in India and Brazil", International President Robert Martinez said in a statement.
Harley said ramping up production overseas could take at least nine to 18 months.
Retaliation by Brussels targeted producers in Republican states where Trump draws much of his support - including bourbon whiskey, Levi's jeans - and is expected to raise the prices of U.S. goods worth up to €2.8bn (£2.5bn).