Harley Davidson shipping some production to Asia

SAN FRANCISCO (KTVU/AP) - President Trump's promise to save American jobs and companies has led to an escalating tariff battle between the United States and Europe, prompting one iconic American manufacturer to announce Monday, it is shifting some manufacturing to Asia.

Harley Davidson says it will stop manufacturing motorcycles for the European Market in the United States and instead move that production to its plant in Thailand. The company said that is because of new tariffs imposed by the European Union on U.S. products Friday.

In a statement to the SEC the company said, "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."

As Harley Davidson celebrates its 115th anniversary this year, customers at one Oakland dealer were ringing bells celebrating their purchase.

"Harley Davidson is an American-made motorcycle, it's American steel. So I do hope it stays here," said Jeffrey VanEck, an Oakland customer, "We have jobs here, this is where we need work."

But the 28-country European Union have responded to President Trump's steel and aluminum tariffs with their own tariffs on more than $3 billion of American goods. 

Harley Davidson says that raised tariffs on their products in from 6% to 31% adding thousands of dollars to each motorcycle's price tag in Europe.

"They sold 40,000 units motorcycles last year, which represents 16% of their sales. That's a very important market for them," said Vinnie Aggarwal, UC Berkeley Political Science Professor and the Director of the Berkeley Asia Pacific Economic Cooperation Study Center.

Aggarwal says other companies that export to Europe could follow, leading to losses of American jobs.

"When you start playing a game of protectionism where you're dealing with multi-national corporations that have the ability to shift their production from country to country, I think you'll see more examples of this kind of reaction by multi-national corporation," said Aggarwal.

President Trump responded with a tweet, "Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag," he said. "I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade."

Along with Harley Davidson motorcycles, Levi's jeans, Bourbon, orange juice, rice, and yachts are among the other U.S. products facing European tariffs.

"An all-out multi-front war against Canada, Mexico, EU when your main concern is China seems to be a very odd strategy," said Aggarwal.

The tariff battle could escalate more. President Trump has threatened  to add another 20% tariff on all European car imports.

Canada has said it will impose tariffs on July first on some $12.8 billion dollars of  U.S. goods.