Harley-Davidson's European trade woes have been front-page news since April, 2021. From the European Association of Motorcycle Manufacturers (ACEM) rushing to the Motor Company’s side to the U.S. and E.U. agreeing to a temporary truce, the environment has been rife with tension.

Unfortunately, that moratorium will end December 1, 2021, unless the U.S. and E.U. can reach a new steel and aluminum trade agreement. If the two parties can’t find middle ground, the E.U. will impose a 56-percent tax on incoming American-made motorcycle over 800cc (Harley’s entire range). Despite the tariff applying to all U.S. manufacturers, Indian Motorcycle has been as quiet as a church mouse on the subject.

Unlike the Motor Company, Indian’s parent company Polaris operates a factory in Opole, Poland. The plant primarily produces ATVs for the European market but it has also manufactured the Scout and FTR models since 2020. The bikes enter the country as "Completely Knocked Down" parts kits with final assembly taking place in Poland. Since there’s added value (jobs) created for the E.U. by the practice, Indian circumvents the import duties.

On the other side of the fence, Harley previously attempted to skirt the E.U. tariffs by moving production to Thailand in May, 2018. While that move avoided fees for some time, it didn’t bring manufacturing to the E.U., prompting the government to revoke the Harley’s Binding Origin Information (BOI) status and impose higher taxes earlier this year.

“It is absolutely clear that relocating production in order to avoid punitive tariffs is not acceptable,” stated E.U. Parliament Trade Committee Chairman Bernd Lange. “Such attempts are also clearly illegal under European law (Customs Code, Article 59, and Implementation Act of 2015, Article 33), and Harley-Davidson has quite openly described the (Thailand) relocation as a means ‘to avoid the tariff burden’ in official reports.”

Despite the ethical and legal arguments, the firm still needs to find a feasible way to access the European market. According to Harley-Davidson's data, the brand has lost around $120M due punitive tariffs in 2019 and 2020.

"So far, Harley has not passed these tariffs on to buyers, but that will not work in the long term,” warned H-D Factory Group Managing Director Matthias Meier.

Of course, the ideal situation would include the U.S. and E.U. governments reaching an agreement by the December 1, 2021, deadline. With a little over six weeks until the cutoff date, details will have to be worked out, but officials are currently weighing all the options.

“We are trying to defuse existing conflicts with the new American government,” added Lange. “I am optimistic that we can find a solution.”

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