Harley announced good news on Monday, deliver better earnings than expected first quarter. Except that Harley then also said that his entire business model in Europe could be completely shattered.
This is due to tariffs that are a legacy of the Trump administration, which unnecessarily waged a trade war with Europe and caught Harley in the crossfire in the form of higher tariffs on American motorcycles. Harley initially thought it was a solution, by rather send motorcycles he built in Thailand to Europe.
But Harley Said Monday that a new ruling by the European Union has meant that the solution will apparently no longer work. Emphasize Harley’s first, and then mine:
Harley-Davidson will file an immediate lawsuit against this decision.
Since 2019, the company has been working with BOI regulatory qualifications, which allow it to supply certain motorcycles manufactured in its international manufacturing facilities at 6% to its EU markets.
The EU’s new ruling applies to the entire Harley-Davidson product portfolio and will effectively ban the company from operating competitively in Europe. From June 2021, all Harley-Davidson products, regardless of their origin, will be below the EU 56% EU tariff
European OEMs, including motorcycle manufacturers, will continue to have significantly lower import tariffs to the US, ranging from 1.2% for up to 800 cc products to 2.4% for more than 800 cc products, and with cars for 2.5%.
The Wall Street Journal, meanwhile, reports that Harley became aware of the verdict late Friday, which should have been an unpleasant surprise.
“This is an unprecedented situation and underscores the real damage of an increasing trade war for our stakeholders on both sides of the Atlantic,” Harley-Davidson chairman Jochen Zeitz said in a statement. ‘The potential impact of this decision on our manufacturing, operations and overall ability to compete in Europe is significant. The imposition of an import tariff on all Harley-Davidson motorcycles is contrary to all conceptions of free trade, and if applied, these increased tariffs will have a targeted competitive disadvantage for our products compared to those of our European competitors. ‘
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One of the first things Harley did after Trump was inaugurated was visit the White House, but that relationship quickly became very, very complicated, and today I guess Harley have more than a few regrets, because now Trump’s decisions have now put Harley on the brink of disaster.
Europe is supposed to be one of Harley’s most important markets, after its CEO said last year leaving some markets and focus more on the US, Europe and the Pacific. And yet this is also the kind of thing Harley presumably has pay lobbyists to help rectify, and I would not be surprised if Harley could finally work out some kind of agreement to stay competitive in Europe. Because Europe definitely wants Harley there to some extent rather than not at all.