Harley released what it said was good news Monday, recording better earnings than expected in the first quarter. Except that Harley also said that his entire European business model could be completely fucked up.
This is because of tariffs that are a legacy of the Trump administration, which unnecessarily started a trade war with Europe and he caught Harley in the crossfire in the form of higher rates for American motorcycles. Harley initially thought it had a solution sending in return motorcycles built in Thailand to Europe.
But Harley said Monday that a new European Union decision meant that the solution would no longer work. The focus is first on Harley, then on mine:
Harley-Davidson will file an immediate legal appeal against this decision.
Since 2019, the company has operated with BOI regulatory accreditations, allowing it to supply its EU markets with certain motorcycles produced at its international manufacturing facilities at rates of 6%.
The new EU ruling will apply 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 origin, will be subject to a 56% import tariff in the EU
European OEMs, including motorcycle manufacturers, will continue operations with significantly lower import tariffs in the US ranging from 1.2% for products up to 800cc to 2.4% for products over 800cc and with cars at 2 ,5%.
Meanwhile, the Wall Street Journal rEPORTS that Harley became aware of the decision late Friday, which must have been an unpleasant surprise.
“This is an unprecedented situation and underscores the real harm of an escalating trade war for stakeholders on both sides of the Atlantic,” Harley-Davidson President Jochen Zeitz said in a statement. “The potential impact of this decision on our overall production, operations and ability to compete in Europe is significant. Imposing an import tariff on all Harley-Davidson motorcycles runs counter to all notions of free trade and, if implemented, these increased tariffs will be 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 it quickly became very, very complicatedand today I assume Harley he has more than a few regrets, because now Trump’s decisions have now put Harley on the brink of disaster.
Europe should be one of Harley’s key markets, after its CEO said last year it would do so leave some markets and focus more on the US, Europe and Asia Pacific. And yet this is also the kind of thing that Harley probably does pays the lobbyists to help solve it and I wouldn’t be surprised if Harley is finally able to make some kind of deal to stay competitive in Europe. Because, certainly, Europe would prefer to have Harley there in a certain quality, rather than not at all.