What happened 

Shares of U.S. motorcycle icon Harley-Davidson Inc (NYSE:HOG) have fallen 15.6% in 2018, according to data from S&P Global Market Intelligence, in large part because it's been a target of tariffs in growing trade wars around the world. 

So what 

The first thing to note is that Harley-Davidson isn't exactly performing well as consumer spending shifts away from motorsports. Retail sales volume worldwide was down 7.2% in the first quarter of 2018, and that doesn't bode well for long-term revenue or profit growth for the company.

Man riding motorcycle on a rural road.

Image source: Getty Images.

Another big impact on Harley-Davidson this year was the announcement that the European Union will increase tariffs on motorcycle imports from 6% to 31%. Obviously, that would increase the cost of bringing Harley-Davidson motorcycles to Europe, a key market for the company, and it wasn't a cost the company wasn't willing to pay. 

Management announced that it will move some production to Europe and absorb $90 million to $100 million in annual costs to make sure customers in the EU can buy their products. 

Now what 

Harley-Davidson is facing a lot of headwinds at a time when the company should be at peak performance. The economy is doing well, wages are rising, and interest rates are fairly low, but still volumes are down for the business. If Harley-Davidson can't grow when times are good, it could be in more severe trouble if we hit a recession -- and that's what will keep me out of the stock in 2018. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.