Harley posted on Monday what it said was good news, posting better-than-expected earnings during the first quarter. Except for Harley, then he also said that his whole business model in Europe could be totally fucked up.
This is due to tariffs that are a legacy of the Trump administration, which unnecessarily started a trade war with Europe and got Harley trapped by the crossfire in the form of higher fares for American motorcycles. Harley initially thought it had an alternative solution for sending motorcycles he built from Thailand to Europe.
But Harley he said Monday that a new European Union ruling meant that this solution would apparently no longer work. Emphasis first on Harley’s, and then mine:
Harley-Davidson will file an immediate lawsuit against that decision.
Since 2019, the company has been operating with BOI regulatory credentials, which allows it to supply its EU markets with certain motorcycles produced at its international manufacturing facilities at tariff rates of 6%.
The new EU standard 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 motorcycle manufacturers, including motorcycle manufacturers, will continue to operate with significantly lower import tariffs in the US, ranging from 1.2% for products up to 800cc and 2.4% for to products over 800cc and with cars at 2.5%.
The Wall Street Journal, meanwhile, reports that Harley found out about the verdict late Friday, which must have been a nasty surprise.
“This is an unprecedented situation and underscores the real harm of an escalating trade war for our stakeholders on both sides of the Atlantic,” Harley-Davidson President 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. Imposing an import tariff on all Harley-Davidson motorcycles goes against all notions of free trade and, if implemented, these increased tariffs will be a targeted competitive disadvantage for our products, compared to European competitors.
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One of the first things Harley did after Trump’s inauguration was visit the White House, but this relationship it quickly became very, very complicated, and, today, I guess Harley has more than a few regrets, because now Trump’s decisions have put Harley on the brink of disaster.
Europe is supposed to be one of Harley’s key markets, after last year its CEO said he would leave some markets i they focus more on the US, Europe and Asia Pacific. And yet, this is also the kind of thing that Harley presumably does pay the pressure groups to help me fix it, and I wouldn’t be surprised if Harley is finally able to get some sort of deal to stay competitive in Europe. Because surely Europe would rather have a Harley with a certain capacity than not at all.