Harley Davidson said it will be shifting some of its US production elsewhere to remain competitive in the European market.
The announcement comes after the EU imposed retaliatory tariffs on the US.
In a “tit for tat” response to these metal tariffs, the EU imposed tariffs on a wide range of US goods, including motorcycles.
Earlier this year the US imposed steel and aluminum from producers in Europe and other regions.
Tariffs on motorcycles exported from the US to the EU increased from 6 percent to 31 percent.
Despite the tariffs adding around $2,200 in costs per motorcycle exported to the EU, Harley Davidson said that it will not raise prices.
“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.
Harley spokesman Michael Pflughoeft was quoted by the Wall Street Journal as saying:
“Expanding international production to alleviate the EU tariff burden is not our preference, but it’s the only sustainable option we have to make motorcycles available and affordable to EU customers.”
Last year the company sold almost 40,000 new motorcycles in Europe. The region accounted for 14 percent of the Milwaukee, Wis.-based company’s sales.
Harley Davidson said that shifting production overseas will require investments and take at least nine to 18 months.
US President Donald Trump expressed surprise to the announcement in a tweet.
Trump said: “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!”