By Allison Prang

Harley-Davidson Inc. plans to move production overseas for motorcycles it sells in Europe, in light of tariffs imposed by the European Union that went into effect on Friday.

The company said in a securities filing Monday that it expects the ramping up of production overseas to take at least nine to 18 months.

"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," Harley-Davidson said in the filing.

EU officials have said the EU'S tariffs are a response to the U.S. tariffs on steel and aluminum.

The company's announcement shows how countries' responses to President Donald Trump's tariffs stand to affect companies that do business abroad. Last week, luxury German car manufacturer Daimler AG warned that tariffs from China placed on vehicles manufactured in the U.S. would hurt revenue and profit from its Alabama factory that makes SUVs.

Harley-Davidson said motorcycles it exports to the European Union from the U.S. will cost $2,200 more on average, but said it doesn't want to increase wholesale prices or manufacturer's suggested retail prices.

"The tremendous cost increase, if passed on to its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region, reducing customer access to Harley-Davidson products and negatively impacting the sustainability of its dealers' businesses," the company said in its filing.

Harley-Davidson said it expects costs related to the tariffs to come out to about $30 million to $45 million for the rest of 2018 and about $90 million to $100 million annually. The motorcycle maker said EU tariffs on the bikes rose to 31% from 6%.

Nearly 40,000 people bought the company's motorcycles in Europe in 2017, Harley-Davidson said. Europe is the company's second-largest source of revenue, behind the U.S.

While most of the company's motorcycles are made in the U.S., Harley-Davidson also has facilities in India, Brazil and Australia.

Shares of Harley-Davidson fell 2.7% premarket.

Write to Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

June 25, 2018 08:24 ET (12:24 GMT)

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