Harley-Davidson Expects Mounting Financial Pressure from European Tariffs

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Harley-Davidson announced today that retaliatory tariffs on US-manufactured goods imposed by the European Union will greatly affect its financial outlook and planning going forward. The tariffs are set to become effective on June 22.

According to Harley’s 8K Financial Disclosure (available here) H-D motorcycles exported from the US to the EU will face an tariff increase from 6 percent to 31 percent. On average, this will cost the Motor Company $2,200 per motorcycle exported. In 2017, Harley sold 39,773 new motorcycles in Europe. For context, it sold 147,972 new motorcycles in the US in 2017. Clearly, the European market, the second largest revenue generator behind the US, is vital to H-D’s business. So, what is Harley’s plan?

If the cost were passed onto dealers and, subsequently, consumers it “would have an immediate and lasting detrimental impact to its business in the region,” according to the statement. Such a cost increase would almost certainly reduce customer traffic in the European H-D dealerships, thus affecting greatly affecting both entities of the Harley network. A price increase is not in the works, neither in suggested retail prices nor wholesale dealer prices. The company plans to bear the brunt of the burden in the near future, the rest-of-year cost anywhere between $30-45 million. Company estimates find that the total annual impact could be nearly $100 million.

In the long term, Harley plans to shift production of motorcycles to its international facilities to supply the EU market. In the same FD statement, Harley says it “maintains a strong commitment to US-based manufacturing which is valued by riders globally.”