Just as Harley-Davidson (HOG -0.29%) looked like it was ready to hit the highway again after reporting strong first-quarter numbers, European regulators are trying to run it off the road by slapping the motorcycle maker with exorbitant new tariffs that will push the total rates to 56%.
While the trade war between the U.S. and much of the rest of the world hasn't been forgotten, it was pushed to the rear burner in the wake of the global pandemic. EU trade ministers have now brought it back to a full boil.
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Harley reported its best U.S. sales in five years, selling 30,983 motorcycles in the first quarter, a 30% increase from the year-ago period, and 79% better than the fourth quarter. The gain coincides with the change CEO Jochen Zeitz made to the bike maker's new-model introduction schedule, which used to be in August, but now is timed to meet heightened buyer interest in riding in the spring.
However, Harley could see those gains suffer a setback because the EU's Economic Ministry in Belgium notified the company come June 1 it will be subject to enhanced tariffs.
As part of a retaliatory strike launched against the U.S. when President Trump sought to level the playing field of trade by hiking tariffs on certain trading partners, the EU responded by hiking tariffs against certain industries, primarily motorcycles and whiskey, that were designed to hit Harley and Jack Daniel's distiller Brown-Forman.
Bikes imported from the U.S. had a 31% total tariff slapped on them, but Harley had been allowed to sell bikes manufactured at its other international plants at rates of just 6%. The EU regulators now say Harley's motorcycles, no matter where they're made, face a 56% total tariff.
Whether there will be a response from the Biden administration remains to be seen.
