Trump puts 25% tariffs on steel, 10% on aluminium, EU in return says it will put tariffs on Harley-Davidsons.
After hearing the news about Trump’s move to levy tariffs on aluminium and steel imports, we started wondering what it might mean for the motorcycle industry, particularly the Harley-Davidson exports the US is famous for. How will the change affect people looking to buy a bike? Will the brand’s value change? And what does the motorcycle industry have to say?
What are these new tariffs all about?
Despite his advisors (including economics advisor Gary Cohn) begging him not to, Trump announced at the beginning of March that there would be tariffs on imported metals (25% on steel and 10% on aluminium), with the aim of breathing new life into the dying foundries of the US. The move will make it cheaper for US companies to buy American than to import from abroad (China in particular) – but it will still be more expensive over all for them to buy American. Companies, including Harley-Davidson, are now having to deal with the consequences, and we’re only just discovering what it might mean for the motorcycle industry.
“Our Steel and Aluminum industries… have been decimated by decades of unfair trade and bad policy with countries from around the world… We want free, fair and SMART TRADE!”
– Donald J. Trump in a March 1st tweet
Will Harley-Davidson’s brand value change?
As steel will cost more for American manufacturers, the cost of production for all metal-based products will increase, including cans of pop and beer, cars and motorcycles; whether they buy pricy American steel or heavily taxed imported steel, the industry giants will struggle. The EU will also be imposing countermeasures to protect their own steel export industry. Jean-Claude Juncker, European Commission President, has said that the EU is willing to “also do stupid”, and Harley-Davidson bikes (along with iconic American bourbon and blue jeans) specifically will be taxed when imported to the EU. This means that the price of new Harleys will almost definitely shoot up for buyers in the UK.
What does Harley have to say about it?
“A punitive, retaliatory tariff on Harley-Davidson motorcycles in any market would have a significant impact on our sales, our dealers, their suppliers and our customers in those markets.”
– Harley-Davidson officials in a statement
In fact the tariffs could have an estimated $30 million dollar cost for Harley-Davidson alone. But these things aren’t set in steel (get it?) as Trump has known to be malleable in his policy decisions if the wind changes. The threat has also been made before – in 2003 the EU fought against George Bush’s plans to tax imported steel by taxing Harleys, and Bush never went through with the plan. So, if you’re a fan of the brand or a dealer wondering how on earth you’ll sell the bikes, you don’t need to panic just yet… but you should keep an eye on the situation as news about developments is coming in fast.