Harley-Davidson to build motorcycles destined for European Union outside of U.S.

Logo of U.S. motorcycle company Harley Davidson

The European Union has ordered tariffs on American imports like bourbon, peanut butter and orange juice.

The EU implemented tariffs on just over $3 billion worth of USA goods in response to Trump's decision to hit steel and aluminum imports with tariffs.

That will make each bike about $2,200 more expensive to export, Harley said.

"Harley-Davidson maintains a strong commitment to USA -based manufacturing which is valued by riders globally", executives said.

Harley tied its higher costs to a sequence started by Trump, who praised the company as a model American manufacturer during a February 2017 meeting at the White House.

The company sold nearly 40,000 motorcycles in the European Union a year ago, generating revenue second only to the United States, according to the Milwaukee company.

European and United States stock markets all plummeted on Monday amid fears the world was heading towards an all-out trade war.

Wisconsin-based Harley-Davidson said the increased costs from the European Union tariffs were a "substantial" burden and a threat to its global sales, which it has been trying to expand.

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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.

The company's brand derives from U.S. manufacturing and if it wants to keep its iconic status, "it needs to focus on USA production", said spokesman Tony Montana. Sales of the company's bikes have already been stung in recent years, with the initial bite of the recession followed by a general downturn in interest from Millennial riders.

In the wake of the sluggish United States sales, Harley-Davidson announced in January it would close its Kansas City, Missouri assembly plant and consolidate jobs in York, Pennsylvania. USA motorcycle sales peaked at more than 1.1 million in 2005 but then plummeted during the recession. It wasn't immediately known whether any other facilities would be consolidated. The company built its reputation and image by making motorcycles here, and if the company wants to continue to market itself as an iconic American brand both at home and overseas, it needs to focus on US production.

Rows of motorcycles are behind a bronze plate with corporate information on the showroom floor at a Harley-Davidson dealership in Glenshaw, Pennsylvania, April 26, 2017. "Taxes just a Harley excuse - be patient!" Martinez added. "Does Harley even understand what "Made in America" means?"

The company, which is to give more details on the move next month when it reports second-quarter earnings, has been moving some production overseas for years, somewhat eroding its image as an iconic American brand. "Can't blame them. Many companies are being put in very hard positions".

White House trade and manufacturing adviser Peter Navarro said on Monday the administration wants Harley to make more motorcycles in the United States. To avoid this cost, the country will shift to countries where there are lower or no tariffs.

Wisconsin's elected leaders said the decision pointed to the need to expand markets.

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