Facing higher costs from tariffs, Harley-Davidson said it is shifting production of motorcycles sold to European customers from the United States to another site offshore.
The European Union imposed tariffs on a range of U.S. products in response to similar levies that President Donald Trump put on steel and aluminum from Europe. The E.U. tariffs will add $2,200 to the cost of an average motorcycle, threatening "an immediate and lasting detrimental impact to its business," the company said Monday in filing with the Securities and Exchange Commission.
For the rest of this year, the company said the tariffs will add $30 million to $45 million to its expenses. Rather than pass on those costs to consumers in higher prices, Harley said it would absorb them for now while it begins planning to move production offshore. The full-year tariff bill could reach $100 million, the company said.
"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 available to customers in the EU and maintain a viable business in Europe," the company said.
The news sent the company's share price down by nearly 6 percent in midday trading in New York. Harley's decline came amid broader market weakness that saw the Dow Jones Industrial Average fall nearly 400 points or more than 1.5 percent.
Edward Alden, a senior fellow at the Council on Foreign Relations, said the decision undermined the president's claim that his "America First" trade stance would benefit manufacturing workers.
"If Trump's trade policies are leading an iconic company like Harley-Davidson to move production out of the United States, then who exactly is benefiting?" Alden said. "This will pose a real challenge to the president's core claim that his policies will lead companies to build more things in the U.S."
Europe represents Harley's No. 2 market, after the United States, with sales last year approaching 40,000 units. Shifting production to its non-U.S. plants will require additional investment overseas and is expected to take nine to 18 months, Harley said.
The move is among the first signs that Trump's use of tariffs, which he has promoted as a way to boost employment in the steel and aluminum industries, is hurting other American businesses. Harley's motorcycles division employs about 5,200 workers. The company provided no details of the number of jobs that would be lost as a result of the production change. A company spokesman did not immediately respond to a request for comment.
Initial reaction from prominent Republicans on Capitol Hill highlighted unease with the president's tactics. "This is further proof of the harm from unilateral tariffs," said AshLee Strong, a spokeswoman for House Speaker Paul Ryan of Wisconsin. "The best way to help American workers, consumers, and manufacturers is to open new markets for them, not to raise barriers to our own market."
Trump has said that "trade wars are good and easy to win," but users of imported steel and aluminum already are feeling the pain of the administration's policies.
Mid-Continent Nail of Poplar Bluff, Missouri, the largest U.S. nail manufacturer, cut 60 jobs on June 15 and plans to lay off an additional 200 workers in a few days, citing plummeting sales following the imposition of Trump's metals tariffs. The company said it may not survive past Labor Day if it doesn't get relief from the tariffs.
"It's not just us. There will be many, many companies that will pay a price for this," said George Skarich, vice president of sales and marketing. "I'm disappointed in Trump. We didn't see this coming."
Mid-Continent's orders for July are only 30 percent of what they were last year, and Skarich is afraid that many of his lost customers will never return.
Skarich voted for Trump, as did 79 percent of surrounding Butler County.
Mid-Continent Nail imports from Mexico most of the metal wire it uses to make nails. By driving up the company's costs, Trump's tariffs are making it nearly impossible for the 500-worker company to compete with cheap nails from China, Skarich said.
"The Chinese get a pass and we pay a price," said Skarich. "Trump ran on jobs and making America great again, but he is making a decision that may help big steel, but it hurts downstream businesses like ours who employ a heck of a lot more people than steel does."
Mid-Continent has asked the Commerce Department to grant it a tariff waiver that would allow it to continue importing Mexican metal. But the department is struggling amid a backlog of roughly 21,000 similar product exclusion requests and may not act fast enough to save the jobs of employees making up to $14 an hour plus benefits.
Sen. Claire McCaskill, D-Mo., criticized Commerce Secretary Wilbur Ross last week during a Senate Finance Committee hearing, saying his handling of the product exclusions threatened the company's future.
"They have filed 24 separate exclusion requests, but there will not be enough time for them to potentially save their business," she said.
Heather Long is an economics correspondent. Before joining The Washington Post, she was a senior economics reporter at CNN and a columnist and deputy editor at the Patriot-News in Harrisburg, Pa. David J. Lynch is a staff writer on the financial desk who joined The Washington Post in November 2017 after working for the Financial Times, Bloomberg News and USA Today. The Washington Post's Mike DeBonis contributed to this report.