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Standard & Poor’s has placed motorcycle maker Harley Davidson’s debt on credit watch due to cost increases from a U.S. trade dispute with the European Union.

The ratings agency says the Milwaukee company’s A-minus debt has negative implications because of tariffs imposed by the EU in retaliation for U.S. tariffs on steel and aluminum. S&P says the tariffs could lead to profit margin deterioration and increased risks when combined with falling retail sales and shipments.

This week Harley said it would move production of motorcycles bound for Europe overseas, blaming EU tariffs that it said would add $2,200 to the cost of an average bike.

S&P says it will resolve the credit watch after Harley’s second-quarter earnings.

Messages were left Wednesday seeking comment from the company.

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