Harley-Davidson Hit With EU Tariff Ruling, Plans Appeal -- 4th 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 an import tariff
of 56% on its products and keep it from functioning competitively
The Milwaukee-based company announced the ruling along with
better-than-expected sales and profit for the first quarter, news
of which lifted the stock to a new multiyear high.
Harley-Davidson 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 beginning June 1.
The European Commission, the EU's executive arm, declined to
The company also released its quarterly result Monday.
Harley-Davidson's earnings jumped to $259.1 million in the first
quarter, from $69.7 million in the year-ago quarter. Revenue
improved to $1.42 billion from $1.3 billion.
Harley-Davidson said motorcycle sales rose 30% in North America
for the first quarter. As a result, the company raised its 2021
forecast for motorcycle revenue growth to between 30% and 35%, up
from its previous projection of 20% to 25%.
Shares of Harley-Davidson rose 9.7% Monday, closing at $44.29,
its highest closing price since 2018.
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.
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 have 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 Colin Kellaher contributed to this article.
Write to Alistair MacDonald at email@example.com
(END) Dow Jones Newswires
April 19, 2021 17:06 ET (21:06 GMT)
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