U.S. motorcycle maker Harley-Davidson announced on Monday that it would shift some production of its motorcycles overseas to avoid retaliatory tariffs imposed by the European Union (EU) in response to the U.S. tariffs on steel and aluminum imports.
"EU tariffs on Harley-Davidson motorcycles exported from the U.S. have increased from 6 percent to 31 percent," Harley-Davidson said in its filing with the U.S. Securities and Exchange Commission.
The U.S. motorcycle maker estimated that these tariffs will result in an incremental cost of approximately 2,200 U.S. dollars per average motorcycle exported from the United States to the EU.
The tremendous cost increase, if passed onto the dealers and retail customers, would "have an immediate and lasting detrimental impact" on Harley-Davidson's business in the region, reducing customer access to its products and negatively impacting the sustainability of its dealers' businesses, the company said.
Therefore, in the near term, Harley-Davidson will bear the significant impact resulting from these tariffs and not raise prices on consumers.
In the long term, the company will be implementing a plan to shift the production of its motorcycles for EU destinations from the United States to its international facilities to avoid the tariff burden.
"Harley-Davidson expects ramping-up production in international plants will require incremental investment and could take at least nine to 18 months to be fully complete," said the company.
The announcement came after the EU's retaliatory tariffs against U.S. products in response to the U.S. tariffs on steel and aluminum imports came into effect on Friday.
"Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. I fought hard for them and ultimately they will not pay tariffs selling into the E.U.," U.S. President Donald Trump tweeted on Monday, urging the company to "be patient."
Harley-Davidson is the latest example that U.S. companies relying on overseas markets would be hurt by the Trump administration's protectionist trade policy, analysts said.
In 2017, nearly 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the EU countries is second only to the United States, according to the company.
"EU tariffs on Harley-Davidson motorcycles exported from the U.S. have increased from 6 percent to 31 percent," Harley-Davidson said in its filing with the U.S. Securities and Exchange Commission.
The U.S. motorcycle maker estimated that these tariffs will result in an incremental cost of approximately 2,200 U.S. dollars per average motorcycle exported from the United States to the EU.
The tremendous cost increase, if passed onto the dealers and retail customers, would "have an immediate and lasting detrimental impact" on Harley-Davidson's business in the region, reducing customer access to its products and negatively impacting the sustainability of its dealers' businesses, the company said.
Therefore, in the near term, Harley-Davidson will bear the significant impact resulting from these tariffs and not raise prices on consumers.
In the long term, the company will be implementing a plan to shift the production of its motorcycles for EU destinations from the United States to its international facilities to avoid the tariff burden.
"Harley-Davidson expects ramping-up production in international plants will require incremental investment and could take at least nine to 18 months to be fully complete," said the company.
The announcement came after the EU's retaliatory tariffs against U.S. products in response to the U.S. tariffs on steel and aluminum imports came into effect on Friday.
"Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. I fought hard for them and ultimately they will not pay tariffs selling into the E.U.," U.S. President Donald Trump tweeted on Monday, urging the company to "be patient."
Harley-Davidson is the latest example that U.S. companies relying on overseas markets would be hurt by the Trump administration's protectionist trade policy, analysts said.
In 2017, nearly 40,000 riders bought new Harley-Davidson motorcycles in Europe, and the revenue generated from the EU countries is second only to the United States, according to the company.
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