New tariffs on U.S. Goods, including bourbon, yachts and motorcycles imposed by the European Union are already being felt by companies, such as iconic American motorcycle manufacturer Harley-Davidson as the company announced it would begin shifting some of its production to its international facilities to curb costs.
Harley’s stock dropped sharply by 6.92%. ETFs with the heaviest Harley-Davidson exposure felt the burn as well–First Trust NASDAQ Global Auto ETF (NASDAQ: CARZ) was down 2.84% and First Trust Nasdaq Transportation ETF (NASDAQ: FTXR) fell by bout 4%.
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“To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the U.S. to its international facilities to avoid the tariff burden,” the company said in a filing.
Harley’s statement is one of the first from a major U.S. manufacturer that is caught in the midst of ongoing trade battles between the United States, the EU and China. The EU’s tariff affecting more than $3 billion of U.S. goods came as a response to U.S. duties on European steel and aluminum.
In addition to the U.S., Harley-Davidson currently has production facilities located in India, Brazil and a forthcoming facility in Thailand. The company said it will not increase the price of its motorcycles to counter the tariff, but expects an incremental cost of $2,200 per motorcycle exported from the U.S. to Europe.
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“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,” the company said.
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