50 Per Cent Tariffs a “Death Knell” For Harley-Davidson

You can’t turn on the news or pick up a newspaper this week without reading about US President Donald Trump’s latest round of financial tariffs.

Almost no stone has been left unturned in President Trump’s desire to put US manufacturing and production back in first place, although not all tariffs were created equal. The UK, for instance, is ring-fenced with countries like Argentina, Australia, the UAE, and Saudi Arabia, and it is being hit with some of the lowest ‘base rate’ tariffs.

The flip side of this coin are what Trump calls "the worst offenders", countries which he, and his team see as taking the USA for a ride when it comes to trade. Included in this list are the European Union, China, Japan and Taiwan, with them each seeing tariffs which range from 20 per cent (in the case of the EU) to a whopping 54 per cent (in the case of China).

But it’s the USA’s most famous motorcycle maker that is really sweating, as the guillotine hangs ominously above its iconic V-twin motorcycles. Speaking to a congressional trade panel earlier this week, Jonathan Root, the company’s chief financial officer, called for more support for US motor makers, saying, “Competitor brands should not be allowed to take advantage of low-cost manufacturing and preferential import duty when accessing the U.S. market,”. Mr Root thinks bikes from outside the USA can find their way too cheaply to market Stateside, making Harley’s made in America bikes (some are built overseas) seem overly expensive.

The trouble is, nations are lining up with retaliatory tariffs on rafts of US-made goods, and motorcycles made in America are not immune to the squeeze. Should these tariffs come into force, they could, in some markets at least, cause the European price of Harley’s most premium bikes to skyrocket. Using the Danish example reported by both the Mail and the Wall Street Journal, the $27,999 (in the USA) Harley-Davidson Road Glide could see its price spike to a reported $124,000 if the proposed EU retaliatory tariffs are brought in. A premium grand touring motorcycle it maybe, but if it's going to cost the same as a two-bed terraced house in the northeast of England, it begins to look like poor value for money. It’s worth noting that in Denmark, there is a strong tax on any motorcycle costing more than DKK 76,200 - £8,500 (150 per cent), and with Denmark being a relative minnow in the European motorcycle industry, the pain felt from this nation alone will be negligible.

Financial markets expert Michael Uhlarik has gone on the record as saying that the proposed taxes could cause serious financial pain for Harley-Davidson in some of the larger European nations. The European bike industry is bolstered by brands such as BMW, Ducati and Triumph, and importantly for each of them, they sell well on the global stage, as well as in Europe. Speaking to WSJ about the challenge Harley and other American brands face, Uhlarik said, “Even a 10 per cent to 20 per cent increase in pricing, plus antipathy toward American brands in general, would be a death knell”.

In 2018, during Trump’s first term as president, tariffs were imposed during a trade war that centred around metals. This dumped a 25 per cent tariff on Harley’s bikes. That trade dispute lasted for three years and meant Harley-Davidson had to soak up a reported $166 million while setting up a manufacturing base in Thailand for some of its models - an attempt to circumvent future trade spats. It’s not clear if America’s most famous motorcycle maker could do the same again, with a spokesperson for congress stating that even bikes made in Thailand will not be immune from the tariffs.

EU tariffs on goods imported from the USA are set to take effect on April 9.

Find the latest motorcycle news on Visordown.com