Donald Trump 'surprised' Harley-Davidson will 'wave white flag' in battle over EU tariffs

Driving into the EU: Harley-Davidson has announced plans to move some of its production to the EU, rather than pass on higher costs to consumers. US imports including motorcycles were hit with levies by the EU last week - TASS

Harley-Davidson is to shift production of some of its iconic motorbikes out of its US plants as it falls victim to the trade war between America and Europe.

The Milwaukee-based company said a rise in tariffs from 6pc to 31pc on its motorbikes exported to European customers would result in a “tremendous” cost increase of approximately $2,200 (£1,656) on each bike.

The business has seen its products hit with punitive import levies by the EU as it retaliates against a 25pc tariff the US placed on imports of steel and 10pc on aluminium.

To avoid passing on costs to its customers in Europe the company said it would relocate production of bikes bound for the EU to “international facilities to avoid the tariff burden”. The company pointedly referred to the EU levies being “imposed in response to US tariffs”.

The relocation could take nine to 18 months to complete as factories outside the US take time to gear up. The move highlights the unintended risks posed to the US by President Donald Trump’s introduction of levies.

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Reacting on Twitter, Mr Trump criticised the company for its decision.

"Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag," he wrote. "I fought hard for them and ultimately they will not pay tariffs selling into the EU, which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse - be patient!"

The tariffs are part of a campaign pledge Mr Trump made to protect US industrial jobs, saying that America is unfairly burdened by current trade arrangements. He has vowed to “level the playing field” for US companies.

However, as other nations react with their own levies, his strategy risks backfiring and harming the US economy. 

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Harley-Davidson said it “maintains a strong commitment to US-based manufacturing” and relocating production 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”.

For such a high-profile company as Harley-Davidson to directly link its decision to Mr Trump’s tariffs is a blow for the current administration.

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Harley-Davidson said that if it passed on the cost increase from tariffs to dealers and customers it 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 decision will mean a “significant impact” on the business, estimated at between  $30m and $45m for the rest of this financial year, and up to $100m a year on an annual basis.