Increasing tariffs from Europe on Harley-Davidson bikes may force the American manufacturer to shift production to Europe in a few years’ time.
Harley-Davidson CEO Matt Levatich has said that the American motorcycle manufacturer may consider building motorcycles in Europe if the US and EU trade war doesn’t cool off soon. Harley-Davidson has been hit by retaliatory tariffs slapped by the European Union which makes Harley bikes more expensive across the Atlantic. Speaking to a television channel, Levatich said that his company may need to start building bikes in Europe if it wants to continue selling them there. The increased tariffs hitting Harley-Davidson are at 31 per cent right now, and in another two years, the tariffs will rise to 56 per cent, which is likely to compel the American manufacturer to consider an alternative approach.
Harley-Davidson has been hit with high tariffs from the European Union, after the US Administration slapped increased tariffs on steel and aluminium imports. The issue has been in the news last year with President Donald Trump severely criticising Harley-Davidson’s announcement to move some production overseas. While Harley-Davidson so far had not mentioned any production plans in Europe, there have been talks about considering increasing overseas manufacturing in existing H-D plants in Brazil, India, Thailand and Australia. This is the first time the Bar & Shield brand has actually announced any plans to actually manufacture bikes in Europe.
Levatich said that Harley-Davidson is currently exploring the option of importing bikes into EU from the H-D factory in Thailand, but if that fails, then Harley-Davidson will consider “going through another investment possibly within the European Union.” What that possibly implies is that setting up production in Europe may work out to be a more affordable option than face the 56 per cent levies which the company will have to face in two years’ time by exporting motorcycles from the US.
Harley-Davidson has big plans for the future with its “More Roads to Harley-Davidson” with three new models planned by 2020, including an adventure touring model. But more than the conventional internal combustion engine models, Harley-Davidson will be looking to capitalise on its electric mode line-up which has already been in development for a few years now. Europe will be an important market for the electric Harley-Davidson motorcycles, including the LiveWire and high tariffs will not make a good business case. So, instead of 56 per cent tariff on exporting the new-age Harleys, it will probably be more pragmatic to set up shop, and start manufacturing in an important market like Europe.