- Harley-Davidson shares dropped Friday amid escalating trade tensions.
- The motorcycle company said a trade war with Europe would hinder sales based on EU retaliatory tariffs.
- President Donald Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum, materials needed to build motorcycles.
Harley-Davidson shares dropped as much as 2.3 percent Friday after the company said a trade war with Europe would "significantly" hurt motorcycle sales.
President Donald Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, affecting the motorcycle company's manufacturing costs. In response, the European Union told the World Trade Organization about plans to increase duties on motorcycles and other goods, a direct hit on Harley's products.
Nineteen percent of Harley-Davidson's sales were to Europe in the first fiscal quarter of 2018, according to the company's earnings release.
"Import tariffs on steel and aluminum will drive up costs for all products made with these raw materials, regardless of their origin," company officials said in a statement. "Additionally, a punitive, retaliatory tariff on Harley-Davidson motorcycles in any market would have a significant impact on our sales, our dealers, their suppliers and our customers in those markets."
The Milwaukee-based company is down 21.2 percent this year.