Harley-Davidson to move production from U.S. over tariffs

Trump’s trade war begins to ripple through American economy

Harley-Davidson, the U.S. motorcycle manufacturer, said Monday that it would shift some production of its iconic bikes overseas to avoid retaliatory tariffs imposed by the European Union in response to U.S. President Donald Trump’s trade moves. The decision, announced in a public filing, is the latest and most high-profile example of how Trump’s trade war is beginning to ripple through the U.S. economy as domestic companies begin struggling with a cascade of tariffs both here and abroad.

While Trump says his trade policy is aimed at reviving domestic manufacturing, Harley-Davidson’s decision shows how the administration’s moves could have the unintended effect of reducing U.S. employment and economic growth.

Last week, the European Union hit back against Trump’s steel and aluminum tariffs with penalties on $3.2 billion (U.S.) worth of U.S. products, including bourbon, orange juice, playing cards and Harley-Davidsons. On Monday, the Wisconsin-based company said that European tariffs on its motorcycles had increased to 31 per cent from 6 per cent and estimated that would add about $2,200 on average to every motorcycle exported from the United States to the bloc.

Rather than pass that cost along, the company said it would shift production to its overseas facilities to avoid the EU tariffs.

“Harley-Davidson believes the tremendous cost increase, if passed on to 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,” the company said in the filing.

Harley-Davidson’s decision carries huge significance given Trump’s frequent championing of the Wisconsin company as an American icon and a successful U.S. manufacturer that is creating jobs in the United States. Trump hosted Harley-Davidson executives at the White House in February, where he called the firm a “true American icon” and thanked it “for building things in America.” Harley-Davidson did not specify how many jobs it might shift to its overseas facilities as it ratchets up European production.

The company already produces some bikes and parts at facilities in India, Brazil, Australia and Thailand and said the shift should take nine to 18 months to complete. The company sold about 40,000 new motorbikes last year in Europe, equivalent to a sixth of its worldwide sales.