Harley-Davidson, the American motorcycle manufacturer, said on Monday that it was shifting the production of its bikes outside the United States to avoid European Union tariffs imposed as part of a widening trade dispute.
The announcement, made in a public filing, is an early sign of the financial cost to companies on both sides of the Atlantic as the United States and Europe impose tariffs and counter-tariffs on each other. The moves have raised the specter of a full-blown trade war as the Trump administration pursues a protectionist tack with both allies, including the European Union, Canada and Mexico, and rivals, like China.
Harley-Davidson said on Monday that European Union tariffs on its motorcycles had increased to 31 percent, from 6 percent. It estimated that the higher tariffs would add about $2,200 on average to every motorcycle exported from the United States to the bloc. The company sold about 40,000 new motorbikes last year in Europe, its most important market after its home country.
“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, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses,” it said in the filing.
Harley Davidson said the increase in tariffs would cost it an extra $30 million to $45 million for the rest of 2018. It said shifting its production outside the United States would take nine to 18 months.
