Even though there have already been rapprochements in the tariff dispute between the EU and the US, the situation for Harley-Davidson is still unclear. Harley-Davidson still faces a punitive tariff of 56 percent, which could make them the big loser in this power play.
Increase already since 2018
The issue started back in 2018, when the European Union stood up to then-U.S. President Trump as he imposed tariffs of 10 percent on European aluminum and 25 percent on European steel. The EU also responded with increased tariffs, including on motorcycles larger than 500cc. The 6% import duty previously due was increased by a further 25%. Despite the increased import costs, Harley decided not to pass on these additional costs to the end customer and to bear them themselves for the time being.
Production moved to Thailand to avoid punitive tariffs
To get around the increased import costs, Harley decided to have almost all models for the European market manufactured in Thailand. As of the end of 2019, the switch was complete and Harley saved itself the high punitive duties due to the so-called Binding Origin Information. However, this was withdrawn from Harley in April 2021 and instead of the 6% import duty, 31% would have been due again. However, the implementation of the increase was then postponed from May to December, as there was a desire to consult again and in the meantime there had been convergences in this area between the USA and the EU. Agreement has already been reached for the aircraft sector. However, how it looks with motorcycles, and thus for Harley-Davidson, is currently still in the stars.
“If the politicians fail to reach an agreement, this will mean 56 percent import duty on every motorcycle for us from the end of this year – a profound injustice and unfair distortion of competition,” explains Matthias Meier, Chairman of the German-Austrian and European Association of Harley-Davidson Authorized Dealers. While European motorcycle manufacturers can continue to export to the U.S. at significantly lower import duties – 1.2 percent for machines up to 800 cubic centimeters, up to 2.4 percent for bikes over 800 cubic centimeters and 2.5 percent for cars – Harley-Davidson is expected to accumulate more than $100 million in EU duties in 2021 alone – so far without any price correction for customers. “Our conviction is: this cannot continue!” adds Matthias Meier. “The situation, which is currently unclear for all parties involved, may affect both the end-user prices of our motorcycles and the Motor Company’s volume planning for Europe.”
An online petition has also been created on this topic: https://www.change.org/p/unione-europea-harley-davidson-händlerverband-gegen-eu-strafzölle
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