NEW YORK -- Harley-Davidson said on Tuesday it plans to move manufacturing of its China-bound motorcycles out of the U.S. to Thailand this year to escape Chinese tariffs levied on American vehicle imports.
The iconic motorcycle maker may also shift some manufacturing to Europe after similar tariffs levied by the European Union on U.S. motorcycles hit the company hard.
Harley-Davidson said higher tariffs increased costs by about $21 million for the January-March quarter, and may push them up $100 million to $120 million for the full year.
The EU imposed an additional 25% in import duties on U.S. motorcycles in June 2018. China followed suit in August.
The maker's moves indicate how companies are dealing with the ongoing trade battle. "We plan to supply China from Thailand by the end of the year," CEO Matt Levatich said in an earnings call on Tuesday.
The company does not disclose its sales for China, but sold 6,074 vehicles across the Asia-Pacific region -- China included -- during the first quarter, amounting to 12% of global sales.
Previously, almost all Harley-Davidson exports to the region came from the U.S. with the exception of India, where the company has a factory. But a new facility was set up in Thailand last year to produce vehicles for other countries in the region.
Last June, Harley-Davidson said it would shift production of motorcycles bound for Europe to facilities outside the U.S. to avoid crippling tariffs. The move sparked backlash from U.S. President Donald Trump, who accused the company of using tariffs as an excuse to move operations overseas.
On Tuesday, Levatich said Harley-Davidson plans to manufacture in the EU if the bloc fails to lift tariffs. "Europe has always been an option as we looked at how to mitigate the EU retaliatory tariffs," he said.
In a surprise reversal on Tuesday, Trump tweeted that Harley-Davidson "had to move production overseas to try and offset some of that Tariff that they've been hit with, which will rise to 66% in June of 2021."
"So unfair to U.S. We will Reciprocate!" he added.