On Tuesday, Harley-Davison was happy to report a nine percent gain in sales in the first quarter of 2021. This was the first sign of success from HD’s Hardwire strategy coming together after it was announced by Jochen Zeitz, Harley-Davidson CEO. The strategy was to combat the American brand’s struggle as of late and a successful Q1 meant they were on the right track. This initial victory announcement was unfortunately drowned out by the European Union’s announcement to declare a 56-percent tariff on all future Harley-Davidson imports.
Until now, the American Company has had the benefit of a six-percent European income tax. This was due to thankfully having Binding Origin Information (BOI) credentials. Harley-Davidson’s BOI status allowed them to import bikes from all over the globe into Europe without having to pay additional taxes.
A battle with the former Trump administration and the EU – on European tariffs – led the Motor Company to use this tactic, it looks like the party is over. The EU has ordered the Belgian Ministry of Economy to strip HD of its BOI status and starting June 2021, the American brand will begin paying a 56-percent tariff on all imports shipped to Europe.
“This is an unprecedented situation and underscores the very real harm of an escalating trade war to our stakeholders on both sides of the Atlantic,” said Harley-Davidson CEO, Jochen Zeitz. “The potential impact of this decision on our manufacturing, operations, and overall ability to compete in Europe is significant.”
Harley-Davidson’s recent Q1 win was mainly thanks to the American market, while the European market reported a 36-percent decrease in sales, the 56-percent tariff will only impose further turmoil in the Motor Company’s succession plan.
“Imposing an import tariff on all Harley-Davidson motorcycles goes against all notions of free trade and, if implemented, these increased tariffs will pose a targeted competitive disadvantage for our products, against those of our European competitors,” continued Zeitz.
As it stands, all European motorcycles imported in the US only pay up to 2.4 percent and even less if the bike is under 800cc. Zeitz plans to launch an appeal to reverse the recent blow handed out by the EU in an effort to remain in the European market. Sure, they had a great first quarter, but HD has a very tough hurdle to get over.