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Blaming tariffs, Harley Davidson to shift production overseas

The Wisconsin company is being hit retaliatory European Union tariffs.
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Wisconsin's Harley Davidson says it will shift some production of its famous motorcycles overseas because of new tariffs implemented by the European Union.

The E.U. is introducing tariffs on a series of American products in retaliation for tariffs the U.S. is implementing on aluminum and steel imports.

On Monday, the Milwaukee-based Harley Davidson said the tariff hikes – raising its export taxes from 6 percent currently to 31 percent – would add an extra $90-$100 million to its annual costs.

This in turn will increase costs of each bike by $2,200, but Harley has said it will not be raising prices for consumers in response, instead choosing to shift more of its production to international countries to avoid the E.U. tariffs.

Harley currently has overseas plants in Brazil, Thailand, India and Australia, while its U.S. plants are in Milwaukee, Pennsylvania and Kansas.

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"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," Harley said in a federal filing.

As CNBC notes, President Donald Trump, whose tariffs on U.S. imports have led to the retaliation in Europe, has previously thanked Harley for manufacturing its bikes in America, while criticizing those who move production overseas.

Among those critical of the tariffs is Minnesota GOP Rep. Erik Paulsen, who said on Monday that the move by Harley is "a predictable consequence of a misguided trade policy."

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