Car Industry

Harley-Davidson will outsource some production due to retaliatory tariffs

New European tariffs could cost H-D as much as $100 million each year.

Harley-Davidson

Tariffs levied against the US in response to its own escalations against foreign cars could cost Harley-Davidson big time, and it's prepared to do what it can to minimize the effect.

Harley-Davidson plans to move some of its motorcycle production outside the US in response to retaliatory tariffs that include its products, Bloomberg reports. Its products imported to Europe originally faced a 6 percent tax, but that number has since risen to 31 percent.

Bumping the price of each bike by more than $2,000 could well sink Harley-Davidson's chances to compete in non-US markets.

Harley-Davidson

The manufacturer estimates that each bike will cost approximately $2,200 more to bring to Europe. But instead of asking its customers to make do with the price hike, Harley-Davidson will instead absorb these costs. In a filing, the company estimated that it will spend up to $100 million each year to keep its price tags flat.

It's not like Harley-Davidson only manufactures its products in the US right now, though. The company already has plants in Australia, Brazil and India, and it will soon open another facility in Thailand. It's likely that one or more of these plants will take on the production that leaves the US. 

Harley-Davidson did not immediately return a request for comment.

Europe is too important of a market for Harley to neglect. According to H-D's data, the manufacturer sold nearly 40,000 bikes in Europe in 2017, its highest share of overall deliveries since 2011 and representing the second largest overall market around the world. US sales in 2017 totaled about 148,000.

Harley-Davidson might be somewhat of an anachronism, but it's hoping to reinvent itself in the near future. The company said it's still on track to deliver its first production electric motorcycle in 2018.