Harley-Davidson has responded to the European Union’s threat to impose tariffs on Harley motorcycles, saying it could have a significant impact on sales and customers.
European Commission President Jean-Claude Juncker has identified Harley-Davidson bikes and Levi jeans as targets for “countermeasures” the EU has been preparing in retaliation for President Donald Trump’s plan to place tariffs on foreign steel and aluminum.
Trump has said he would impose a 25% tariff on steel imports and a 10% tariff on aluminum imports, a move welcomed by the U.S. steel industry but opposed by manufacturers of many products that have a high metal content.
Roughly 16% of Harley-Davidson’s sales are to Europe.
In a statement, Harley now says, “Import tariffs on steel and aluminum will drive up costs for all products made with these raw materials, regardless of their origin. Additionally, a punitive, retaliatory tariff on Harley-Davidson motorcycles in any market would have a significant impact on our sales, our dealers, their suppliers and our customers in those markets.”
This wouldn’t be the first time that Milwaukee-based Harley-Davidson, the world’s largest manufacturer of heavyweight motorcycles, has faced tariffs in trade disputes. The EU threatened tariffs on its bikes in 2003 when President George W. Bush sought taxes on imported steel.
In India, where big touring motorcycles and cars are saddled with a 100% import tariff, Harley’s sales have grown at a rapid clip.
That’s largely because the company has been able to get around the tariff by assembling bikes there, something it’s done in that country since 2011.
Harley plans to open a motorcycle assembly plant in Thailand this year, as the tariff on motorcycles assembled in the United States is about 60% in that country, according to the company.
In the United States, Harley and other motorcycle manufacturers are caught between two customer demographic trends: millennials who aren’t widely embracing the motorcycling lifestyle, and baby boomers who are aging out of riding.
Harley’s 2018 performance will be key for investors as, at the beginning of 2017, management projected a sluggish outlook and then revised it downward.
Harley said it expects to ship between 231,000 and 236,000 motorcycles to dealerships this year after shipping 241,498 in 2017, the lowest in six years.
Trump said Monday he is moving ahead with tariffs on imported aluminum and steel despite calls from House Speaker Paul Ryan to avoid creating what Ryan called an unnecessary trade war.
“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” said AshLee Strong, Ryan’s spokeswoman. “The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”
“We’re not backing down” on tariffs, Trump said in remarks before a meeting with Israeli Prime Minister Benjamin Netanyahu. “We had a very bad deal with Mexico, we had a very bad deal with NAFTA,” the North American Free Trade Agreement with Mexico and Canada.
Trump started his week with tweets that said he may end the tariffs on Mexico and Canada in exchange for better terms in the talks to renew NAFTA.
The president did not provide many details in a pair of tweets, except to say that Canada “must treat our farmers much better,” while Mexico “must do much more on stopping drugs from pouring into” the United States.
“NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A.,” Trump tweeted. “Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.”
USA Today contributed to this report.
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