Production of Harley-Davidson motorcycles sold in Europe will move from U.S. factories to facilities overseas, the Milwaukee-based company announced Monday, a consequence of the retaliatory tariffs the EU is imposing on American exports in an escalating trade war with the Trump administration.

President Trump has used the iconic American motorcycle maker as an example of a U.S. business harmed by trade barriers in other countries, but Harley had warned that tariffs could negatively impact its sales.

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The European Union on Friday began rolling out tariffs on American imports including bourbon, peanut butter and orange juice. The EU tariffs on $3.4 billion worth of U.S. products are retaliation for duties the Trump administration is imposing on European steel and aluminum.

The company said in a regulatory filing Monday that EU tariffs on its motorcycles exported from the U.S. jumped between 6 percent and 31 percent, adding about $2,200 per average motorcycle exported from the U.S. to the EU.

Harley-Davidson Inc. sold almost 40,000 motorcycles in the EU last year, its second-largest market after the United States, according to the company. The EU sales make up almost 16.4 percent of Harley-Davidson’s worldwide sales. In the U.S., Harley-Davidson sold 147,972 motorcycles last year, according to company data.

“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe,” the company said in its prepared remarks.

Harley-Davidson said it will not raise its prices to avert “an immediate and lasting detrimental impact” on sales in Europe. It will instead absorb a significant amount of the cost in the near term. It anticipates the cost for the rest of the year to be $30 million to $45 million.

Shifting production overseas could take up to 18 months.

The company is already struggling with falling sales. In January, it said it would consolidate its Kansas City, Missouri, plant into its York, Pennsylvania, facility. U.S. motorcycle sales peaked at more than 1.1 million in 2005 but plummeted during the recession. It wasn’t immediately known whether any other facilities would be consolidated.

“Harley-Davidson’s announcement today is the latest slap in the face to the loyal, highly-skilled workforce that made Harley an iconic American brand,” Robert Martinez Jr., president of the International Association of Machinists and Aerospace Workers, said in a statement. The union represents Harley-Davidson workers in Milwaukee, and the Kansas City and York plants.

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“Will Harley use any excuse to ship jobs overseas?” Martinez said. “Does Harley even understand what ‘Made in America’ means?” “The ultimate goal, if we could get there, is no tariffs or if anything few tariffs on anything,” said Walker, a Republican. “That’s what I’m going to push for, ways that we can get to a level playing field then we don’t have this tit for tat on any number of products out there.”

Courtesy: www.pressherald.com

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