By IVAN MORENO MILWAUKEE (AP) — Production of Harley-Davidson motorcycles sold in Europe will move from U.S. factories to facilities overseas, the Milwaukee-based company announced Monday, a consequence of the retaliatory tariffs the EU is imposing on American exports in an escalating trade war with the Trump administration. President Donald Trump has used the iconic American motorcycle maker as an example of a U.S. business harmed by trade barriers in other countries, but Harley had warned that tariffs could negatively impact its sales. Trump tweeted Monday that he’s surprised that Harley-Davidson was first “to wave the White Flag” in the tariff dispute between the U.S. and the European Union. “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., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse – be patient! #MAGA,” Trump tweeted. A Harley-Davidson spokesman said the company had nothing to say in response to Trump’s tweet beyond its filing with the U.S. Securities and Exchange Commission. The European Union on Friday began rolling out tariffs on American imports including bourbon, peanut butter and orange juice . The EU tariffs on $3.4 billion worth of U.S. products are retaliation for duties the Trump administration is imposing on European steel and aluminum. The company said in a regulatory filing Monday that EU tariffs on its motorcycles exported from the U.S. jumped between 6 percent and 31 percent, adding about $2,200 per average motorcycle exported from the U.S. to the EU. The impact on U.S. workers because of Harley-Davidson’s decision was not immediately clear. Harley-Davidson declined interview requests Monday but said in prepared remarks that the company “maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally.” White House press secretary Sarah Huckabee Sanders defended Trump’s trade policies Monday during a press briefing. “The EU is attempting to punish U.S. workers with unfair and discriminatory trade policies, and President Trump will continue to push for free, fair and reciprocal trade and hopes that the EU will join us in that,” Sanders said. Harley-Davidson Inc. sold almost 40,000 motorcycles in the EU last year, its second-largest market after the United States, according to the company. The EU sales make up almost 16.4 percent of Harley-Davidson’s worldwide sales. In the U.S., Harley-Davidson sold 147,972 motorcycles last year, according to company data. “Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe,” the company said in its prepared remarks. Harley-Davidson said it will not raise its prices to avert “an immediate and lasting detrimental impact” on sales in Europe. It will instead absorb a significant amount of the cost in the near term. It anticipates the cost for the rest of the year to be approximately $30 million to $45 million. Shifting the production overseas could take up to 18 months, the motorcycle maker said. The company is already struggling with falling sales. In January, it said it would consolidate its Kansas City, Missouri, plant into its York, Pennsylvania, facility. U.S. motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession. It wasn’t immediately known whether any other facilities would be consolidated. “Harley-Davidson’s announcement today is the latest slap in the face to the loyal, highly-skilled workforce that made Harley an iconic American brand,” Robert Martinez Jr., president of the International Association of Machinists and Aerospace Workers, said in a statement. The union represents Harley-Davidson workers in Milwaukee, and the Kansas City and York plants. “Will Harley use any excuse to ship jobs overseas?” Martinez added. “Does Harley even understand what ‘Made in America’ means?” The Trump administration has started fights with trading partners around the world, imposing tariffs on imported steel and aluminum, provoking retaliation from close U.S. allies including the European Union, Canada, Mexico and Turkey. And it has announced tariffs on $50 billion in Chinese goods — a tariff list that could swell to $450 billion if Beijing refuses to back down and counterpunches with retaliatory moves. “More firms will follow Harley’s lead and move production overseas,” says Mary Lovely, a Syracuse University economist who studies trade. “Can’t blame them. Many companies are being put in very difficult positions.” Lovely said Harley and other companies face retaliatory tariffs in Europe and elsewhere if they try to export products. Trump’s tariffs also raise costs on imported parts they need to manufacture in the United States. Meanwhile, the maker of Jack Daniel’s, Brown-Forman Corp., said Monday it would have to raise the price of its product sold in the EU because of the tariff hike, Bloomberg reported. Wisconsin’s elected leaders said the decision pointed to the need to expand markets. “This is further proof of the harm from unilateral tariffs,” said AshLee Strong, a spokeswoman for House Speaker Paul Ryan, a Wisconsin Republican. “The best way to help American workers, consumers, and manufacturers is to open new markets for them, not to raise barriers to our own market.” Gov. Scott Walker echoed those comments, saying increasing markets for Wisconsin and American-made goods will reduce the trade imbalance and needs for tariffs. “The ultimate goal, if we could get there, is no tariffs or if anything few tariffs on anything,” said Walker, a Republican. “That’s what I’m going to push for, ways that we can get to a level playing field then we don’t have this tit for tat on any number of products out there.” ___ Associated Press writer Scott Bauer contributed from Madison, Wisconsin and AP Business Writer Paul Wiseman contributed from Washington. ___ For the latest information about Harley-Davidson: https://apnews.com/4806d760ecfb4607a219f90c98ee29a9<doc-sep>Harley-Davidson Inc. said that it will not raise its prices due to "an immediate and lasting detrimental impact to its business in the region."<doc-sep>
Harley-Davidson said on Monday it would move production of motorcycles shipped to the European Union from the United States to its international facilities and forecast the trading bloc's retaliatory tariffs would cost the company $90 million to $100 million a year. The shift in production is an unintended consequence of U.S. President Donald Trump's administration imposing tariffs on European steel and aluminum early this month, a move designed to protect U.S. jobs. In response to the U.S. tariffs, the European Union began charging import duties of 25 percent on a range of U.S. products including big motorcycles like Harley's on June 22. In a regulatory filing on Monday, the Milwaukee, Wisconsin-based company said the retaliatory duties would result in an incremental cost of about $2,200 per average motorcycle exported from the United States to the European Union, but it would not raise retail or wholesale prices for its dealers to cover the costs of the tariffs. The company expects the tariffs to result in incremental costs of $30 million to $45 million for the rest of 2018, the filing said. "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. Struggling to overcome a slump in U.S. demand, Harley has been aiming to boost sales of its iconic motorcycles overseas to 50 percent of total annual volume from about 43 percent currently. In January, the company announced the closure of a plant in Kansas City, Missouri as part of a consolidation plan after its motorcycle shipments fell to their lowest level in six years. In 2017, Harley sold nearly 40,000 new motorcycles in Europe which accounted for more than 16 percent of the company's sales last year. The revenues from EU countries were second only to the United States. Harley said ramping-up production at its overseas international plants will require incremental investments and could take at least nine to 18 months. The company will provide more details of the financial implications of retaliatory EU tariffs and plans to offset their impact on July 24 when its second-quarter earnings are due, the filing said. Trump vowed to make the iconic motorcycle maker great again when he took office last year. In late April, Harley said Trump's metal tariffs would inflate its costs by an additional $15 million to $20 million this year on top of already rising raw material prices that it expected at the start of the year. Correction: Reuters corrected this story to reflect that share of sales in Europe were more than 16 percent.