New EU Trade Tariffs Threaten Harley’s Health in Thailand
With a new president steering the ship, the EU plays hardball to get what they want.
Trade tariffs have helped Harley-Davidson in the past. Back in the early 1980s, shortly after a group of investors bought the brand back from AMF, President Reagan imposed a tariff on imported motorcycles that helped the ailing company regain its footing. However, now, the leather boot is on the other foot – and the European Union (EU) is after Harley-Davidson.
According to The Hill, Harley-Davidson motorcycles sold in the EU are subject to tariff code 871150. That tariff affects any motorcycle over 800ccs of displacement – basically everything Harley-Davidson makes. Imported bikes above 800ccs are subjected to a 25% tariff above and beyond the list price.
Thailand, a growing market for Harley-Davidson, utilizes a whopping 60% tariff on imported bikes. In an effort to skirt this, Harley-Davidson invested in a factory to build bikes locally and avoid the tariff. However, the EU recently informed Harley-Davidson that the bikes would be treated as imports regardless. In addition, the 25% tariff is now ballooning to 50%.
Collateral Damage
This could seriously harm Harley-Davidson, as Thailand represents their second-largest market. Due to local rules, there is no limit to how high the tariffs can go, as evidenced by the existing 60% tariff. Despite being built locally, Harley-Davidson motorcycles would become instantly out of reach for most customers in Thailand when the new rules take effect on June 1.
It seems that these new trade rules are part of an ongoing trade war. They might be retaliation for some 2018 tariffs imposed by former President Donald Trump on steel and aluminum that came from the EU. Although the EU hasn’t come right out and said as much, the message is clear. “If you won’t play with us, we won’t play with you.”
With President Biden now in the white house, the EU seems to be giving the US government one last change to drop their steel and aluminum tariffs and play nice with the EU. Unfortunately, Harley-Davidson is caught in the middle as collateral damage. Given their new global strategy, this could be a make-or-break moment for the 118-year-old company.
Photos: Harley-Davidson
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