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Harley estimates the European tariff increase from 6 percent to 31 percent on motorcycles would add $2,200 to the cost of an average motorcycle exported from the U.S.to the EU.

"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 global facilities to avoid the tariff burden", the filing from the company reads. While Harley said it's committed to making motorcycles in the USA, it suggested it had no other choice but to move production from its home market. Harley-Davidson declined interview requests Monday but said in prepared remarks that the company "maintains a strong commitment to USA -based manufacturing which is valued by riders globally".

While Harley-Davidson had been struggling financially well before the EU's retaliatory tariffs went into effect, the import duties of 25% certainly didn't help matters.

Donald Trump is no longer a fan of Harley Davidson, according to his always-active Twitter.

Harley tied its higher costs to a sequence started by Trump, who praised the company as a model American manufacturer during a February 2017 meeting at the White House. That increases the costs for companies to bring the parts they need into the United States to complete their products.

"Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag", Trump tweeted in response on Monday.

Citing tariffs tied to escalating tension between Trump and the European Union, the iconic motorcycle maker will further retrench its U.S. operations. Trump's complaints ultimately resulted in India agreeing to slash the tariffs to 50 percent, even though the president still wasn't happy. On Friday, it began new tariffs on around $3.4bn worth of United States products being brought into the EU. That will add an estimated $90 million to $100 million in costs annually.

Harley-Davidson, up against spiraling costs from tariffs, will begin to shift the production of motorcycles headed for Europe from the U.S.to factories overseas.


"Thank you, Harley-Davidson, for building things in America", Trump said at the time. Further, we can probably expect to see more American manufacturers shifting their overseas sales to production facilities outside of the United States. Harley-Davidson shares sank more than 5 per cent in morning trading on Monday, its worst day in months.

Harley-Davidson did not immediately respond to a request for comment Tuesday. But he says the ultimate goal is the removal of all tariffs so "we don't have this tit for tat on any number of products out there".

The company did not say where production would be shifted, or how many jobs might be affected, but said the move would take nine to 18 months to complete.

Additionally, retaliatory tariffs from the EU, Canada, Mexico, and more make it expensive to get finished goods into those markets.

The decision is a blow to the Trump administration, which has defended its imposition of tariffs on the European Union as part of a strategy to boost jobs in the US.

Harley-Davidson said it will not raise its prices to avert "an immediate and lasting detrimental impact" on sales in Europe.

Follow Harley-Davidson's stock price in real-time here.


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