The company said in a regulatory filing Monday that European Union tariffs on its motorcycles exported from the US jumped between 6 percent and 31 percent, adding about $2,200 per average motorcycle exported from the U.S.to the EU.
Harley plans to absorb much of the cost increase tied to the EU's tariffs because passing it on to dealers or customers would make an "immediate and lasting detrimental impact" on its business, it said in the filing.
Europe is Harley's second biggest market outside the US and sold nearly 40-thousand motorcycles in the Europe a year ago.
"Harley-Davidson maintains a strong commitment to US -based manufacturing which is valued by riders globally", executives said.
Harley-Davidson said Monday that European Union tariffs on its motorcycles had increased to 31 per cent from 6 per cent.
Harley-Davidson's stock, and the Dow Jones as a whole, dipped Monday morning as trade-war fears mounted.
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But then, unbidden, came the trade war.
Donovan, however, says that the move makes flawless sense in the context of the new tariffs.
The company made a decision to build the Thailand plant after Trump pulled out from the Trans-Pacific Partnership, which would have lowered import tariffs on its bikes in some of the fastest-growing motorcycle markets in Asia.
The company estimates the tariffs will result in $30 million to $45 million in additional costs this year and $90 million to $100 million on an annualized basis.
In response, Trump blasted Harley-Davidson for using the tariffs as an "excuse" to move more of their manufacturing overseas.
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Mr Trump said Harley-Davidson was "waving the white flag". The tariff on motorcycles rose from an initial 6 percent to 31 percent.
The company said that retaliatory European taxes on imported motorcycles will have a "significant impact" on its business, increasing the cost of motorcycles by $2,200 on average, so has chose to move production elsewhere.
While Trump has repeatedly claimed that the US can win trade wars, victims are starting to pile up at home and overseas.
Harley-Davidson said that shifting targeted production from the USA to global facilities could take up to 18 months to be completed. A White House spokeswoman did not immediately respond to a request for clarification. Levatich has struggled to attract younger buyers in the company's core home market: U.S. retail sales plunged 12 per cent in the first quarter, the 13th decline out of the last 14 quarters. Bourbon is made in Senate Majority Leader Mitch McConnell's home state of Kentucky, and Harley-Davidson makes its bikes in House Speaker Paul Ryan's home state of Wisconsin. It's unclear at this stage where production outside of the USA will be carried out. Harley-Davidson has plans to open another facility in Thailand for the same reason.
It also has production facilities in India, Brazil and Thailand.
Retaliation by Brussels targeted producers in Republican states where Trump draws much of his support - including bourbon whiskey, Levi's jeans - and is expected to raise the prices of USA goods worth up to €2.8bn (£2.5bn).
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