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Harley-Davidson plans to shift the production of some of its bikes out of the United States in response to Europe's new tariffs on motorcycle imports.

The EU began levying the new tariffs Friday on $3.4 billion worth of US goods such as motorcycles, bourbon and peanut butter.

"Harley-Davidson maintains a strong commitment to US -based manufacturing which is valued by riders globally", the company's filing said.

Iconic US motorcycle company Harley-Davidson announced Monday that it was moving more of its production outside of the US in response to new tariffs, showing the reality of how President Donald Trump's trade fights can backfire.

US President Donald Trump has repeatedly used the company as an example of how European import tariffs hurt US producers. Europe is its second-largest market after the U.S.

David Bro/ZUMA Press/NewscomHarley-Davidson, the iconic American motorcycle brand, will shift some manufacturing overseas in response to the raising of trade barriers on both sides of the Atlantic. This year, domestic sales are flat, but foreign sales are up 12 percent, according to the The Wall Street Journal.

Harley-Davidson's (HOG) stock fell 2% in premarket trading. A year after Trump pulled the United States out of a 12-nation trade deal, the Trans-Pacific Partnership, in January 2017, Harley announced it would close its factory in Kansas City, Missouri, and consolidate production in York, Pennsylvania, eliminating about 260 jobs.

The company chose to build the Thailand plant in response to Trump's decision to pull out from the Trans-Pacific Partnership which would have lowered import tariffs on its bikes in some of the fastest-growing motorcycle markets in Asia.

In February, Harley-Davidson announced the recall of 251,000 motorcycles due to possible brake failures, a move estimated to have cost the company $25 million. The new 31% import tariffs came into effect on June 22 and were imposed by the European Union as a response to the steel and aluminium tariffs brought by the American government.

Harley says in the filings that it will not raise MSRPs or wholesale dealership prices to make up for the losses connected to tariffs.

The company is already struggling with falling sales. Harley-Davidson, based in Milwaukee, employed 5,800 workers at the end of 2017.

Harley said increasing production at its overseas global plants would require incremental investments and could take at least nine to 18 months. "We are hopeful the United States and European Union governments will continue to work together to reach an agreement on trade issues and rescind these tariffs".

Harley's move is an example of what economists say will likely be a growing trend: businesses leaving the U.S. because of Trump's tariffs.

Production could be shifted to its plants in Brazil, India and Thailand. "This is further proof of the harm from unilateral tariffs", said AshLee Strong, a spokeswoman for House Speaker Paul Ryan of Wisconsin.


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