Harley-Davidson announced Monday it would move some of its production overseas to avoid a dramatic tariff increase imposed by the European Union. The EU tariff comes In response to the United States implementing a tax on aluminum and steel to several countries, including EU nations. The EU has responded in kind, levying a tariff on several American products. The most notable for the Motorcycle.com audience is the tariff on American motorcycles 500cc and larger. This is clearly targeted at Milwaukee-based Harley-Davidson, though Indian Motorcycles (and parent company Polaris) will also be impacted. Electric motorcycles are not affected by this tariff, leaving Zero Motorcycles out of the conversation.

The EU’s tariff on motorcycles spiked sharply from 6% to 31%, with Harley-Davidson predicting a cost increase of approximately $2,200 per motorcycle exported from the U.S. to the EU. Today, The Motor Company filed with the SEC, stating it would not pass along the increased cost to its dealers or its customers, because passing along the tremendous cost increase “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.” Harley-Davidson will instead absorb the cost and estimates in the short term “incremental cost for the remainder of 2018 to be approximately $30 to $45 million. On a full-year basis, the company estimates the aggregate annual impact due to the EU tariffs to be approximately $90 to $100 million.”

Long term, Harley will attempt to offset the tariffs by moving production of motorcycles destined to European countries to its facilities outside the US, like Brazil, Thailand, Australia, and India. As the EU is Harley-Davidson’s second-largest market, accounting for nearly 40,000 motorcycle sales in 2017 alone, it is a market the company clearly does not want to lose. In the filing, Harley stated that moving production internationally was not the company’s preference, but for the short term anyway, this was the best option to maintain its viability in Europe.

The filing made no mention on the impact this would have on jobs for current Harley-Davidson employees in the U.S., but noted that “Harley-Davidson will provide more details of the financial implications and plans to mitigate the impact of retaliatory EU tariffs during the company’s second quarter earnings conference call on July 24, 2018, at 8:00AM CDT.”

Retro Roadster Gaiternational

Harley-Davidson won’t face any additional tariffs in India, as had been previously rumored. One possible reason for the change of heart being the Harley-Davidson Street 500 and 750 are manufactured there.

Interestingly, reports from India had speculated that it ,too, would impose tariffs on US motorcycles, but as of press time those additional tariffs had not actually been levied. Presumably the manufacture of the Harley-Davidson Street 500 and 750 in India plays a part in this decision. Motorcycle.com will update this story once we receive an official response from Indian.