On April 20, 2021, Harley-Davidson announced a nine percent sales gain in the first quarter of 2021. The positive update was the first tentative sign that CEO Jochen Zeitz’s Hardwire strategy is coming to fruition and served as an encouraging development for the struggling American brand. Unfortunately, the victory was short-lived, as the news coincided the European Union (EU) announcing a 56-percent tariff on future Harley-Davidson imports.
Up to this point, the Motor Company enjoyed a six-percent European income tax thanks to its Binding Origin Information (BOI) credentials. That BOI status enabled Harley to import motorcycles from its international plants into Europe while avoiding additional taxes.
While the brand has used that tactic since the Trump administration’s contentious EU tariff battle, it looks like the jig is up. At the request of the EU, the Belgian Ministry of Economy stripped Harley of its BOI credentials and informed the company that a 56-percent tariff will be imposed in June, 2021.
"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 Zeitz. "The potential impact of this decision on our manufacturing, operations and overall ability to compete in Europe is significant.”
Zeitz’s alarm is very understandable, especially when one considers Harley’s recent losses in the region. Though the brand posted a positive sales report in Q1 2021, the North American market heavily influenced the final numbers. The European sector, however, posted a 36-percent loss and a 56-percent tariff will only foil the MoCo’s efforts to regain its footing in the region.
“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.
For context, the U.S. levies a 1.2-percent tariff on European motorcycles up to 800cc and 2.4 percent on larger engines. The bar and shield isn’t taking the news lying down, however, as Zeitz plans to launch an immediate appeal. The Q1 2021 results marked a momentous milestone for Harley-Davidson, but it has an even bigger battle ahead.