Harley to get smacked with 25% import tax today

Today is a day that Harley-Davidson and Indian are going to be dreading. It’s the date set for EU trade tariffs to be adopted against a huge range of American-made products in retaliation against new US import taxes on steel and aluminium from Europe.

The US adopted its tariffs at the start of this month, despite threats of reprisals from the EU. It added a 25% tariff on imported steel and 10% on imported aluminium. 

On Thursday last week European nations unanimously backed plans for retaliatory action, and as a result the tariffs against US products are expected to be adopted at a meeting of the European Commission taking place tomorrow.

The full list of US goods that will be hit by a 25% EU import duty runs to more than 10 pages of A4. But for us, the key lines are:

• Motorcycles and cycles fitted with an auxiliary motor, with or without side-cars; side-cars. With reciprocating internal combustion piston engine of a cylinder capacity exceeding 500 cm3 but not exceeding 800 cm3
• Motorcycles and cycles fitted with an auxiliary motor, with or without side-cars; side-cars. With reciprocating internal combustion piston engine of a cylinder capacity exceeding 800 cm3

In other words, any bike over 500cc. They’ll be smacked with a 25% import duty, compared to the 6% currently levied on US motorcycles.

Harley and Indian are, of course, the two companies that will suffer. We won’t know the precise impact that the new tariffs have on their prices for some time yet, since there’s sure to be a delay in between their imposition and showroom prices rising. But it’s easy to see that eventually they’re likely to be forced to raise prices to cover the additional import costs.

And it’s not just Europe, either. India – also hit by the new US steel and aluminium tariffs – has proposed a hike its import taxes on US bikes over 800cc by 50%.

The US tariffs on steel and aluminium, intended to protect the country’s own metal industry, are also expected to increase the manufacturing costs of motorcycles, since the raw materials will get more expensive. So even in the US – by far the biggest market for Harley and Indian – the firms’ profits could be hit by the trade war.