The American company Harley-Davidson will move the production of some motorcycles out of the United States to avoid rising costs from tariffs.
The European Union has ordered tariffs on American imports like bourbon, peanut butter and orange juice. The EU says about $3.4 billion worth of U.S. products are affected.
The new taxes are meant to answer tariffs the Trump administration is requiring on steel and aluminum imports from Europe.
Harley-Davidson sold almost 40,000 motorcycles in EU member countries last year. The company says the EU is its second largest market, after the United States.
The maker of the well-known motorcycle said on Monday that EU tariffs on its motorcycles jumped between six percent and 31 percent. The company said it expects the tariffs will result in an increased cost of about $2,200 per average motorcycle exported from the U.S. to Europe.
“Increasing international production…is not the company's preference,” the statement said. It added that the decision is the only way to operate a viable business in Europe, which Harley-Davidson called a ‘critical market.’
The company said that it will not raise its prices because that would cause an immediate and long-lasting effect on sales in Europe. In the near term, Harley-Davidson will instead absorb most of the cost of moving the production of motorcycles overseas. It estimates the cost for the rest of this year to be from $30 million to $45 million.
Harley-Davidson bikes are lined up at a bike fair in Hamburg, Germany, February 24, 2017. REUTERS/Fabian Bimmer
Harley-Davidson said that moving some production from the U.S. to factories overseas could take at least nine to 18 months to be completed.
On Monday, the vice president of the European Union's governing body said that Europe and China will form a group aimed at reforming international trade rules. The group will examine technology policy, government assistance to businesses and other issues in order to guarantee support for international trade.
European Commission Vice President Jyrki Katainen noted recent actions by U.S. President Donald Trump in disputes over steel, China's technology policy and other issues. He said they showed the need to modernize the World Trade Organization.
The Wall Street Journal newspaper reports that the Trump administration plans to limit Chinese investment in American technology companies and high-tech exports to China.
I’m Caty Weaver
The Associated Press reported this story. Susan Shand adapted the report for Learning English. George Grow was the editor.
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Words in This Story
tariff–n. a tax on goods coming into or leaving a country
preference– n. something that is liked or wanted more than something else
viable–adj. able to work, survive or develop
absorb–v. to take in