Harley-Davidson's foreign customers are important ones: International sales were up 12% in Q1, while the US saw a 0.2% decline, reports the Wall Street Journal. In an effort to preserve its good mojo abroad, the motorcycle maker on Monday announced that within 18 months it will be producing EU-sold bikes outside of the US. The move is a reaction to the 31% tariff the EU put in place on Friday, which was itself the first phase of retaliation against new US tariffs on steel and aluminum. CNNMoney reports the tariff had previously been 6%. The company said the new figure would jack up the cost of a motorcycle by $2,200, and it's unwilling to pass that increase on to its EU consumers, who purchased roughly 40,000 bikes in 2017—a six-year high.
That made the EU its second-biggest source of revenue last year, per the AP. Harley-Davidson will swallow the increase until the production has moved; it expects that to be as much as a $45 million hit this year. How the company frames its decision: "Increasing international production to alleviate the EU tariff burden isn't 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." Bloomberg reports the company didn't specify which of its foreign facilities would take on the extra work. It has operations in Brazil, India, and Australia and will add Thailand to that mix this year. (Read more Harley-Davidson stories.)