The European Union has begun taxing the import of motorcycles from the United States into Europe, in retaliation to the US government's increased tariffs on aluminium and steel. The EU will now impose a 25 per cent tariff on all motorcycles above 500 cc which are being brought in from the United States. The affected American motorcycle brands will certainly be Harley-Davidson and Indian Motorcycle, which will see higher sticker prices in Europe, and is certain to affect sales. Harley-Davidson sells around 40,000 motorcycles every year in the European Union.
The magnitude of the effect on Harley-Davidson's sales isn't known yet, but the company is bracing for a "significant impact" on its sales after the decision by the EU to increase duties on motorcycles.
"We support free and fair trade and hope for a quick resolution to the issue. We believe a punitive, retaliatory tariff on Harley-Davidson motorcycles in any of our major markets would have a significant impact on our sales, our dealers, our suppliers and our customers in those markets," Harley-Davidson said in a statement.
The new increased tariffs by the European Union come after the US adopted its increased tariffs on steel and aluminium imports at the beginning of June, despite threats of reprisals from the EU. The US added a 25 per cent tariff on imported steel and 10 per cent on aluminium. There are a lot of American goods that will be hit by the increased EU tariffs, but in this case, the writing is clear that motorcycles above 500 cc will be slapped with a 25 per cent import duty, compared to the 6 per cent which had been levied so far on American-made motorcycles.
So far, it's not clear as to the precise magnitude of the effect the new tariffs will have on motorcycle prices, but Harley-Davidson is likely to be the more affected company, considering Indian's European footprint isn't that strong and new growth of Indian is mostly concentrated inside the United States.
But it's not just the European Union where Harley-Davidson will face the heat in the coming months. India has also decided to slap retaliatory tariffs against 30 US products which will come into effect on August 4. And India is set to impose 50 per cent tariff on US-made motorcycles with engine capacity of more than 800 cc. Harley-Davidson is the leading premium motorcycle brand in India, with annual sales of over 3,000 motorcycles. The only saving grace for Harley-Davidson India is that only four of the total 16 motorcycle models sold in India are full imports from the US. The bulk of Harley-Davidson India's sales come from the made in India Street 750 and Street Rod models.