The company sold about 40,000 new motorbikes previous year in Europe, equivalent to a sixth of its worldwide sales, making the region its most important market after its home country. The company operates manufacturing facilities in Brazil, India and Australia, and expects to start operating the new Thailand factory this year.
"Increasing worldwide production to alleviate the European Union tariff burden isn't the company's preference, but represents the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe", Harley-Davidson said.
The EU targeted the American motorcycles as part of its rebuttal to President Donald Trump's tariffs on imported aluminum and steel, one aspect of his multi-front trade war.
In order to avoid the impact of higher European Union tariffs on its sales, the company also announced that it would be "implementing a plan to shift production of motorcycles for European Union destinations from the U.S. to its global facilities".
Daimler, which also produces its premium Mercedes cars in the United States, said its 2018 profits were expected to be hit by higher Chinese tariffs on imports of American-made cars.
Trump has argued that the U.S.is being taken advantage of, but some business leaders argue that Nafta facilitated the exact kind of trade that benefits USA companies.
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Amid the early fallout of the mounting trade war, Trump took to Twitter, saying he was "surprised" about Harley Davidson's move and assuring the company it would not "ultimately" pay European Union tariffs, without clarifying how that would happen.
Last week, German automaker Daimler AG cut its 2018 earnings outlook, a change that it says is partly due to increased import tariffs for US vehicles in China.
The European Union imposed tariffs on a range of USA products in response to similar levies that President Donald Trump put on steel and aluminum from Europe.
The EU tariffs are a response to new U.S. duties on steel and aluminium imports.
Donald Trump is no longer a fan of Harley Davidson, according to his always-active Twitter.
After early steep declines, markets pared losses after White House trade adviser Peter Navarro softened the country's stance on investment restrictions.
Wisconsin-based Harley-Davidson said the increased cost from the tariffs threaten its worldwide sales, which it has been trying to expand.
Editorial Note: The following is the text of a filing made by Harley-Davidson, Inc.to the U.S. Securities and Exchange Commission today, June 25, 2018. AshLee Strong says the best way to help American workers, consumers and manufacturers is to open new markets and not raise barriers.