HOG Harley Davidson Inc

By Alistair MacDonald and Colin Kellaher 

Harley-Davidson Inc. has been hit with a European Union import ruling that the motorcycle maker says would impose a massive tariff increase on its products and keep it from functioning competitively in Europe.

The Milwaukee-based company has been one of the highest profile U.S. casualties of recent trade disputes, after the EU slapped a 25% duty on it and other U.S. goods in 2018. Those levies were a response to tariffs the Trump administration imposed on steel and aluminum from producers in Europe and elsewhere.

On Monday, Harley-Davidson said Belgium's Economic Ministry, on behalf of the EU, had notified the company that it was revoking an agreement that allowed the business to supply Europe with certain motorcycles produced at its international manufacturing facilities at tariff rates of 6%.

Harley-Davidson said the EU ruling would apply to its entire product portfolio and subject all products -- regardless of origin -- to a 56% import tariff within the trade bloc.

The European Commission, the EU's executive arm, didn't immediately respond to a request for comment.

Harley-Davidson had lowered its EU tariff bill by sending motorcycles to Europe that were made in Thailand. The EU had now rescinded that agreement, according to the company.

The motorcycle maker said it plans to lodge an immediate legal challenge to what it called an unprecedented decision that "underscores the very real harm of an escalating trade war to our stakeholders on both sides of the Atlantic."

While the EU's original round of tariffs hit other high profile U.S. goods, such as jeans made by Levi Strauss & Co. and Kentucky bourbon, vocal support from then-President Trump pushed Harley-Davidson into the spotlight as a U.S. victim of the trade barbs exchanged in recent years between the U.S. and Europe and China.

Harley-Davidson said in 2018 that EU tariffs would raise the cost of each Hog it ships to the trade bloc from the U.S. by about $2,200. Rather than raise prices, the company said it would shift production of the motorcycles it sells in the EU outside the U.S., prompting Mr. Trump to then accuse the company of raising the white flag.

Europe, the Middle East and Africa had been one of the company's largest markets outside of the U.S., but earnings Monday showed the company sold almost 3,000 fewer motorcycles in the first quarter compared with the previous year, a fall of 36%. That made Asia Pacific a bigger region for the company.

More recently, the U.S. has ended some of the tariffs it had imposed on goods from elsewhere. Washington canceled in March, for instance, levies on British luxury products, such as Scotch whisky, that had been imposed as part of a continuing dispute over subsidies to Airbus SE, the European aircraft manufacturer.

Write to Alistair MacDonald at alistair.macdonald@wsj.com and Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

April 19, 2021 10:07 ET (14:07 GMT)

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