Harley-Davidson still under threat from EU tariff

YESTERDAY was the deadline for the imposition of US tariffs on imported steel and aluminium from the EU but Donald Trump has announced a 30 day extension to allow for more negotiation.

Why does it matter? Because with no deal in place, steel and aluminium imported from the EU to the US will be subject to extra duties – 25 per cent for steel, ten per cent for aluminium – and plans are in place to retaliate with EU import taxes on American goods including Harley-Davidsons.

Trump’s protectionist tariff plan first came into force in March, but several countries including the entire EU were temporarily excluded until May 1. That idea was to allow time to negotiate deals to avoid or reduce the tariffs. But shortly before the midnight deadline, a 30-day extension to the exclusion was announced.

Harley-Davidson will be breathing a sigh of relief, as there was no sign of a deal being done before the 1st May deadline. On Sunday, British PM Theresa May spoke to her German and French counterparts – Angela Merkel and Emmanuel Macron – and the three agreed that the EU needed to be prepared to defend the EU’s interests. Before that, EU representatives are reported to have turned down US suggestions that the bloc could voluntarily reduce its exports of the materials to the USA.

Harley-Davidson has already been confirmed as being on a list of iconic US products, alongside the likes of Levi’s jeans and Jack Daniels bourbon, which could be targeted with EU tariffs if the USA goes ahead with its plans to put extra duties on European steel and aluminium.

Details of precisely what tariffs would be raised on Harleys should the USA impose duties on European metals remain unknown. However, with Harley already suffering dropping sales in North America, the firm has a 10 year plan that pivots on a large increase in export sales. Europe is by far its biggest export market, and anything limiting the company’s sales here would be a kick in the teeth for Harley. It would be doubly bad, because the protectionist policy to tax imported steel and aluminium in the USA are likely to result in an increase in Harley’s production costs over there at the same time.

Now representatives from the US and Europe have an additional month to hammer out a deal, with the new deadline falling on June 1. Harley-Davidson’s bosses will have another few weeks of sleepless nights waiting to discover their fate.