Harley-Davidson has said it will shift motorcycle production away from the United States to avoid the “substantial” burden of European Union tariffs imposed last week in retaliation to US President Donald Trump’s trade policies.
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This action was utterly predictable because Harley-Davidson is a worldwide corporation operating in a modern global economy. As such it will shift production of Europe-bound bikes to plants in Australia, Brazil, India, or Thailand. The Milwaukee-based company has not yet said which of the plants will actually be getting more work.
The tariff on Harley-Davidson motorcycles, along with a number of other US goods – including bourbon, blue jeans, and orange juice – came into play as a tit-for-tat response to US duties on steel and aluminum imports. Trump has said the duties are necessary to protect the US steel and aluminum industries, which he says are vital to national security.
Harley-Davidson has said the tariffs will add an average of £1,660 (roughly US $2,200) to the sticker price of its motorcycles in Europe. The company’s prices already exist on the very outer edge of reasonable, of course. I mean, I really, really like the Street Bob I’m riding at the moment and would – if I had the money – genuinely consider forking out the cash to meet its steep £12,295 asking price. But £13,995? Nope.
Potential buyers needn’t worry, though. Harley has said it will absorb the costs, rather than risk damaging the steady sales growth it has seen in Europe recently. At present, the MoCo shifts about 40,000 bikes a year here in the Great Socialist Dystopia but it is eager to see that number increase dramatically.
Indeed, one half wonders if the EU tariffs aren’t providing a convenient cover for an action that was already in the works. Though, if that’s true, the move is happening earlier than expected. The increase in non-US production is expected to take nine to 18 months to get up to speed, according to a report by the BBC, and will cost the company somewhere between $30 million to $45 million in additional expenses.
“To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the US to its international facilities to avoid the tariff burden,” the company said in a statement.
I’m personally not surprised by the action, nor do I necessarily think it’s a bad one. European Harley owners are obviously going to be less hung up on the idea of Harleys originating from the United States. Certainly it’s the case that most Triumph owners don’t seem terribly upset by the fact the bulk of that company’s bikes come from Thailand, or that many of BMW’s bikes come from India.
The deep connection to American culture has always been a selling point of Harley-Davidson motorcycles, of course, but it’s fair to say the USA brand has suffered heavily in Europe since Trump’s election in 2016. His policies are deeply unpopular on the other side of the Atlantic Ocean and I personally have observed a resultant increase in cynicism toward Americans and American products.
Harley-Davidson, though, has been doing a good job in recent years of developing its own European identity, so I think it’s entirely possible – and, in fact, likely – that this move will work out to its benefit. Investors, however, are less certain; shares in the company dropped 6 percent on the news.
Meanwhile, we have sent a message to our friends at Indian Motorcycle, asking how this tariff affects “America’s first motorcycle company,” and how its parent company, Minnesota-based Polaris will respond. Additionally, we notice from the list of things facing this new 25-percent tariff that only internal combustion motorcycles are listed. Good news for Zero, then.