“To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the U.S. to its international facilities to avoid the tariff burden,” the company said in a regulatory filing.
“Harley-Davidson expects ramping-up production in international plants will require incremental investment and could take at least 9 to 18 months to be fully complete.”
It will not pass on the cost of tariffs to its customers as that would have a lasting detrimental impact to its business in the region, its second biggest market, the company said.
Production could be shifted to its plants in Brazil, India and Thailand.
Brussels imposed tariffs on a range of US-made products, including cosmetics, whiskey and cranberry juice. The levy on Harley-Davidson bikes has increased to 31% from 6%, the Milwaukee-based company said.
It believes that cost to be about $2,200 per bike it exports from the US to the EU.
“In the near-term, the company will bear the significant impact resulting from these tariffs, and the company estimates the incremental cost for the remainder of 2018 to be approximately $30 to $45m,” Harley-Davidson said.
“On a full-year basis, the company estimates the aggregate annual impact due to the EU tariffs to be approximately $90 to $100m.”