What happened
Over the weekend, the U.S. and EU agreed to resolve a tariff dispute related to steel and aluminum imports, and it's good news for manufacturers like Harley-Davidson (HOG +2.66%). Investors didn't waste any time noticing and drove Harley shares up as much as 11% at its high on Monday. Shares held most of those gains, closing today's session up 9.1%.
So what
In a statement released by the company, chairman and CEO Jochen Zeitz said the news was "a big win for Harley-Davidson and our customers, employees, and dealers in Europe." The Section 232 tariff dispute began under the Trump administration and forced Harley to pay steep tariffs as American-made motorcycles entered Europe for sale. The new agreement will reduce its overall tariff rate from 31% to 6% effective Jan. 1, 2022, the company said.
Image source: Harley-Davidson.
Had an agreement not been reached, Harley said it would have seen its tariff rate increase to 56% in December 2021. In a Securities and Exchange Commission (SEC) filing, the company said the news will reduce its 2022 incremental tariff expense by between $200 million and $225 million.
Now what
Harley-Davidson investors needed some good news as the stock is down almost 18% in the past six months, even after today's pop as well as a bump from solid third-quarter earnings reported last week.
In its Q3 period ended Sept. 26, 2021, the company reported a jump in revenue and net income of 17% and 36%, respectively. The company attributed the strong results partly to progress made on the five-year strategic plan --dubbed Hardwire -- the company announced earlier this year. The strategy is intended to highlight the company's famous brand and "unlock the potential of the most important products, segments, and geographies."
The tariff agreement news gave Harley shareholders another reason to cheer as the company continues to carry out its Hardwire initiatives.
