Harley-Davidson just caught a break from European regulators, finally. After being threatened with a massive 56 percent tariff on its bikes sold in Europe, no matter the country of manufacture, the EU has changed its mind, sort of.
The problems stem back to 2018, when Harley-Davidson’s bikes got caught up in a trade war between Europe and the US. When the US raised tariffs on EU-sourced aluminum and steel, the EU shot back with tariff hikes on Harley-Davidson motorcycles. Eventually, that tariff rose to a whopping 31 percent, driving the cost of European-sold Harleys sky-high.
However, Harley-Davidson was able to sidestep the issue somewhat, by sending its offshore-built bikes to Europe (remember, Harley-Davidson has several offshore factories, including plants in Brazil and Australia). Those bikes only faced a six percent tariff. Considering Harley-Davidson wanted to build its Euro business significantly, this was an important victory.
Unfortunately for the MoCo, Euro regulators decided to resume battle this spring, announcing a hefty 56 percent tariff that would apply to all Harley-Davidsons, no matter where they were produced. The tariff would come into effect in June 2021.
That was bad news for H-D, especially considering the company is about to debut its Pan America adventure bike, exploring a new market segment.
But now there’s good news for the company, with the EU reportedly delaying implementation of the move until the end of 2021. That gives everyone some breathing room to sort things out, and no doubt Harley is working on a plan to take advantage of this immediately. For now, the bikes will still carry a 31 percent tariff, which is still high (much higher than what Euro bikes face in the US!). As Harley-Davidson big boss Jochen Zeitz said in a release to MoCo investors,
“This is the first step in the right direction in a dispute not of our making. Harley-Davidson employees, dealers, stakeholders and motorcycles have no place in this trade war. These tariffs provide other motorcycle manufacturers with an unfair competitive advantage in the E.U. European motorcycles only pay up to 2.4% to be imported into the U.S. We want free and fair trade.”
Stay tuned, then, cuz this isn’t over, and the outcome will likely determine much of Harley-Davidson’s future success.