Harley Davidson to move some production out of US

Harley Davidson, the American motorcycle manufacturer, said 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 announcement is an early sign of the financial cost of companies on both sides of the Atlantic as the United States and Europe impose tariffs and counter-tariffs on each other.

The move has raised the specter of a full-blown trade war as the Trump administration pursues a protectionist tack with both allies, including the European Union, Canada and Mexico, and rivals, like China. Last week, the European Union imposed penalties on $3.2 billion worth of American products, many of which were produced in areas that form the heart of Trump’s political base.

Harley-Davidson said that European Union tariffs on its motorcycles had increased to 31%, from 6%. It estimated that the higher tariffs would add about $2,200 on average to every motorcycle exported from the US to the bloc, so it said it would move the production of bikes meant for Europe outside America.

“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, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers’ businesses,” it said in the filing.

The company said it plans to keep the prices for European Union customers steady while that shift was in progress, meaning it would absorb any additional tariff costs. It did not say anything about how jobs in the United States would be affected. 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.