Harley-Davidson, the US motorcycle manufacturer, said Monday that it was shifting some of the production of its bikes outside the United States to avoid European Union tariffs imposed as part of a widening trade dispute.
The company said ramping up production in global plants would require incremental investment and could take at least nine to 18 months to be fully complete.
Harley sold 40,000 motorbikes in Europe past year, its second-largest market after the US.
"Harley-Davidson maintains a strong commitment to US -based manufacturing which is valued by riders globally", it said in response to the production news.
'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, according to CNN, said.
Harley-Davidson's stock dipped 6 percent on Monday as it became embroiled in a raging trade dispute between the US and Europe, which accounts for a significant amount of its sales.
"Modern trade is a lot more complex [than in the 19th century] and transnational companies dominate".
India's 50% and similar tariffs on imported motorcycles make it hard to sell in those markets.
Investors got another reminder on Monday of how tariffs are hurting America's most important assets - the factories that turn raw materials into unique high-value products.
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Speaking to clients in a daily audio update, UBS Wealth Management's chief economist Paul Donovan described the tariffs imposed by the Trump administration on the European Union and China, as well as retaliatory tariffs from the affected parties as a "19th century tax". In a filing, the company estimated that it will spend up to $100 million each year to keep its price tags flat. "Taxes just a Harley excuse - be patient!" he wrote.
United Steelworkers, a labor union representing some of the motorcycle maker's U.S. employees, said Monday that Harley-Davidson had long since begun to shift its manufacturing operations overseas. In its announcement Monday, the company said only that it may move some work overseas to avoid European Union retaliatory tariffs on American products, but it did not indicate where those resources would be added.
Harley-Davidson is moving its production facilities overseas.
The shift of production - and jobs - from the U.S.to factories in Europe was disclosed in a regulatory filing Monday. A year after Trump pulled the United States out of a 12-nation trade deal, the Trans-Pacific Partnership, in January 2017, Harley announced it would close its factory in Kansas City, Missouri, and consolidate production in York, Pennsylvania, eliminating about 260 jobs. Harley-Davidson shares sank more than 5 per cent in morning trading on Monday, its worst day in months.
Europe represents Harley's No. 2 market, after the United States, with sales a year ago approaching 40,000 units. The tactic is meant to give USA factories producing those raw materials a better chance, because they'll be competing against importers who now have additional tariff costs.
The company did not comment on how many jobs would be shifted away from the US, but said that it would take between nine and 18 months to move production away from Wisconsin. It also has facilities in Brazil, India, and Australia.
The impact on US workers because of Harley-Davidson's decision was not immediately clear.
But that status made the company a target for European Union retaliation along with bourbon and blue jeans.
European Commission Vice President Jyrki Katainen said unilateral action by Trump in disputes over steel, China's technology policy and other issues highlighted the need to modernize the World Trade Organization to reflect developments in the world economy.