Harley-Davidson will begin to shift the production of motorcycles headed for Europe from the US to factories overseas as it faces spiralling costs from tariffs.
The European Union began rolling out tariffs on American imports like bourbon, peanut butter and orange juice last week.
The EU tariffs on 3.4 billion dollars (£2.5 billion) of US products are in retaliation over duties the Trump administration is imposing on European steel and aluminium.
US president Donald Trump has used Harley-Davidson as an example of a US business that is being harmed by trade barriers. However, Harley-Davidson has warned consistently against tariffs, saying they would hurt sales.
Mr Trump said he was surprised the motorcycle maker had been “the first to wave the white flag”.
He tweeted: “I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down 151 Billion dollars (£114bn). Taxes just a Harley excuse – be patient!”
The company sold almost 40,000 motorcycles in the European Union last year, generating revenue second only to the United States, according to the Milwaukee company.
“Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally,” the company said in prepared remarks.
“Increasing international production to alleviate the EU tariff burden 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. Europe is a critical market for Harley-Davidson.”
Harley-Davidson will not raise its prices to avert “an immediate and lasting detrimental impact” on sales in Europe, it said. It will instead absorb a significant amount of the cost in the near term. It anticipates the cost for the rest of the year to be approximately 30 million dollars (£22 million) to 45 million dollars (£40 million).
Harley-Davidson said that shifting targeted production from the US to international facilities could take at least nine to 18 months to be completed.