Harley-Davidson Hit With EU Tariff Ruling, Plans Appeal -- 3rd Update
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
The Milwaukee-based company has been one of the highest-profile
U.S. casualties of recent trade disputes, after the EU put a 25%
duty on its bikes 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
lineup and subject all products -- regardless of origin -- to a 56%
import tariff within the trade bloc.
The European Commission, the EU's executive arm, declined to
Harley-Davidson had lowered its EU tariff bill by sending
motorcycles to Europe that were made in Thailand. With the end of
that arrangement, the company now finds itself battling EU trade
authorities over a tariff imposed on motorcycles that are no longer
produced in the U.S.
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."
The Office of the U.S. Trade Representative declined to
Harley-Davidson received word of the EU's tariff increase late
Friday, a person familiar with the matter said.
The company also had positive news to offer Monday with a sales
update. It said a 30% increase in motorcycle volumes in North
America helped sales exceed expectations for the first quarter. It
also raised its 2021 forecast for motorcycle revenue to growth of
30% to 35%, from a previously projected 20% to 25%.
Harley-Davidson shares were up about 10% in afternoon
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 Donald 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
Harley-Davidson said in 2018 that EU tariffs would raise the
cost of each bike shipped to the trade bloc from the U.S. by about
$2,200. Rather than raise prices, the company said it would shift
production of motorcycles for the EU market to outside the U.S.,
prompting Mr. Trump to accuse the company of raising the white
More recently, the U.S. and EU suspended some import tariffs. In
March, the two sides agreed to suspend tariffs on wine, luggage,
produce and other goods related to a longstanding dispute over
government subsidies to Boeing Co. and Airbus SE. Washington also
suspended tariffs on U.K. luxury goods, including Scotch.
Europe, the Middle East and Africa had been among
Harley-Davidson's largest markets outside of the U.S., but its
first-quarter results showed almost 3,000 fewer motorcycles sold in
the sales region, marking a 36% decline from a year earlier.
The company attributed the decline to shipping delays related to
the pandemic and its decision to stop selling some popular
motorcycle models in the region. Harley-Davidson will soon offer a
new motorcycle known as the Pan America and designed for on-road
and off-road use. Company executives anticipate the model will be
popular in Europe.
The EU tariff decision comes at a time when the company has
curtailed sales activities in lesser foreign markets to focus on
North America, Europe and Japan. Harley-Davidson is in the midst of
overhauling its sales and production strategies under Chief
Executive Jochen Zeitz, a longtime director picked for the top post
early last year. The company in 2020 slashed production of
motorcycles as part of a plan to reduce inventories of bikes at
dealers and boost prices for used models.
Bob Tita and Yuka Hayashi contributed to this article.
Write to Alistair MacDonald at email@example.com and
Colin Kellaher at firstname.lastname@example.org
(END) Dow Jones Newswires
April 19, 2021 15:26 ET (19:26 GMT)
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