President Trump mentioned Harley-Davidson in a recent address to Congress, suggesting that they paid 100% import duty in India, but he seems to have his facts all wrong, as usual.
Last month Harley execs met Trump on the White House lawns with five of their Touring motorcycles.
“They wanted me to ride one, and I said ‘No thank you.’,” he told Congress.
There seems to be no record of Trump ever having ridden a motorcycle and the last thing he would want right now is an excuse for the media to lampoon him … he’s doing a good enough job of that himself.
“At our meeting, I asked them, how are you doing, how is business? They said that it’s good,” Trump told Congress in his hour-long speech.
https://youtu.be/cH_231dBLGI
“I asked them further how they are doing with other countries, mainly international sales. They told me – without even complaining because they have been mistreated for so long that they have become used to it – that it is very hard to do business with other countries because they tax our goods at such a high rate. They said that in one case another country taxed their motorcycles at 100%.
“They weren’t even asking for change. But I am.
“I believe strongly in free trade but it also has to be fair trade,” Trump said.
Where Trump is wrong
Of course Harley didn’t complain.
Their international sales are up 2.3%. In fact, in India, where they face a 100% import duty, their sales have almost trebled in the past year.
Furthermore, the company now manufacturers Street 500 and 750 models in India to avoid the duty.
Harley Street 750 and 500Now, the Indian embassy in Washington has released the facts on their import duties.
They have a 60% import duty on motorcycles less than 800cc and 75% for bigger engines. The 100% duty only applies to second-hand motorcycles so that India doesn’t become a dumping ground for old with low fuel economy and high emissions.
If a motorcycle is imported as a semi-knock-down that has to be put together in India, the duty is only 30%.
If a bike is imported in parts, or a complete knock-down (CKD) and assembled in India, the duty is only 10%.
Harley won’t confirm how much duty they pay, but it is possible they have negotiated a very attractive rate.
In fact, Harley started assembling some bikes in India from 2011 and sales have risen 30% over the past two years.
Trouble at home
In fact, where Harley is not doing well is within America, in particular with Trump supporters. The US President didn’t mention that.
Harley still has a little over 50% of domestic road bike sales, but it is gradually reducing because their major buyer is the ageing white male. Interestingly, these represent a high proportion of Trump supporters.
Harley has identified that to grow its sales in the USA, it needs to reach out to women, Hispanics, black African Americans and young people. Interestingly, these represent a high proportion of Trump detractors.
US import duties
While Trump complains about tariffs imposed on American goods overseas being higher than they impose on imported goods, he also didn’t mention the US push for a 100% duty on motorcycles.
The Office of United States Trade Representative (USTR) is planning to introduce a tariff of 100% or more on European motorcycles with an engine capacity of 51cc-500cc.
The push is the result of a trade war between the European Community and the United States over hormones used by US farmers in beef cattle.
It seems motorcycles have a new purpose – political footballs.
(Article updated on March 11, 2017, with additional information from the Indian embassy.)