By on April 23, 2019

Last summer, the European Union imposed an additional 25-percent import duty on top of the existing 6-percent tariff levied on large motorcycles. Established as a response to the United States’ duties on steel and aluminum, the move crippled Harley-Davidson’s ability to thrive in the European market — a region that accounts for about one-sixth of its global volume.

While much of the media is focused on framing Donald Trump for Harley’s plight, the situation is a little more complicated. The president’s tariffs did indeed spur the EU’s retaliatory fees, but it was Europe that decided to place its crosshairs upon the iconically American motorcycle brand.

We’re not really interested in who fired the first shot, and not just because we’ll never be able to declare a winner that satisfies everyone. Harley-Davidson faces real problems because of the trade war and we’ve been treating it as the canary in the coal mine. Thanks to slimmer margins, motorcycle manufacturers are more susceptible to economic changes than their automotive counterparts — making them a rather effective barometer.

Harley-Davidson reported lackluster first-quarter profits on Tuesday, though Bloomberg claims the results surpassed analysts’ expectations. That still meant the company’s adjusted net income for Q1 fell 26 percent, however. Excluding restructuring costs, tariffs and other money eaters, HD posted earnings of 98 cents a share —  beating the average estimate of 85 cents.

The good news runs out here, as HD said it will likely have to move more production out of the U.S. Trump has already come down on the company for its overseas manufacturing, something it did to help mitigate manufacturing costs and boost overseas volume (primarily in Asia). However, the tariff-related decision clearly irked him more than usual, with the president suggesting the company effectively “waved the white flag.”

Now, he’s changed is tune, if only by a bit. In a tweet issued Tuesday, President Trump accused the EU of bullying the company with tariffs by quoting Fox News pundit Maria Bartiromo.

“‘Harley Davidson has struggled with Tariffs with the EU, currently paying 31 [percent]. They’ve had to move production overseas to try and offset some of that Tariff that they’ve been hit with which will rise to 66 [percent] in June of 2021.’ @MariaBartiromo So unfair to U.S. We will Reciprocate!”

It’s a little strange seeing the president come to the company’s defense; it could be a sign that these salvoes of targeted tariffs are getting out of hand (and are nowhere near over). Meanwhile, HD finds itself caught in the middle of a political feud with little recourse. If it doesn’t build in Europe, its product will be taxed into oblivion. Don’t take our word for it — the company said as much in 2018.

“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe,” Harley-Davidson explained last June.

Even though the company’s woes extend far beyond the issue of tariffs (its main customer base is literally dying out), it’s one of the biggest problems it has to contend with right now. This has forced it to focus nearly all of its efforts on managing its supply chains and factory placement, rather than developing new products and effective marketing campaigns that could potentially help rekindle interest in the brand. You don’t need much of an imagination to craft a scenario where the trade war continues to escalate — and automobile tariffs continue to rise — to a point where every manufacturer plays it safe and boring in a period where sale growth is already stagnating.

[Image: Harley-Davidson]

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66 Comments on “Trade War Watch: It’s Okay to Feel a Little Sorry for Harley-Davidson...”


  • avatar
    ajla

    NoT a CaR.

  • avatar
    JimZ

    ” Thanks to slimmer margins, motorcycle manufacturers are more susceptible to economic changes than their automotive counterparts”

    more than that, it’s because in the US motorcycles are nothing more than expensive *toys.* and toys are the first thing people stop buying when things look like they’re getting tight.

    at any rate, it’s been clear that for at least the past 30 years (clear to anyone paying attention, that is) Trump just says whatever he thinks people want to hear at that moment, even if it contradicts something he said 5 days (or 5 minutes) ago.

  • avatar
    don1967

    It’s hard to feel sorry for a brand which fails to diversify its product lineup.

    When this old biker got tired of heavy, tailbone-crushing cruisers he simply traded his Yamaha V Star for a Yamaha MT-09. Similar conversion options exist within the Honda, Kawasaki, Suzuki, Triumph, and other families. Unfortunately HD was too busy milking every penny from the baby boomers to notice that it had no succession plan.

    • 0 avatar
      JimZ

      ” tailbone-crushing”

      uh, that’s why there are aftermarket seat companies. IME Metric cruisers have the absolute *worst* seats for long-term comfort. They’re universally too soft and squishy. Harleys are hit or miss; the Dyna I had was bad, but an Ultimate seat fixed it. The stock seat on the Street Glide that replaced it is just fine. On the other hand, the stock seat on my FZ-09 was horrible, and it took a couple of tries before I found one which works (Sargent.)

      • 0 avatar
        don1967

        No argument about OEM seats, including the FZ/MT series. But it’s the feet-forward stance of most cruiser bikes that I’m talking about. It’s a fundamental ergonomic flaw that promotes slouching, back pain and tailbone pain.

        • 0 avatar
          JimZ

          I dunno, I can spend 6-8 hours on my SG. The seat is everything. If the seat is too soft, you sink into it too much and that’s what puts pressure on your tailbone. a moderately firm seat with a “relief” channel down the center makes a world of difference. even with the better seat, the riding position of the FZ starts taking its toll on my shoulders and wrists.

    • 0 avatar
      ajla

      Balancing heritage and progress can be a tricky thing for an old company. You can’t live in the past, but you can’t p*ss on it either. I don’t expect H-D offerings that copy Asian or European motorcycles would do any better than Cadillac did copying BMW.

      I do think that they are having some success appealing to a new crowd with their latest stuff. I’m in my early 30s, have no desire to be in the classic “Harley lifestyle” but I’m interested in some of their products for basically the first time ever (the prices are still a smack to the face though). Still, I understand that “interest” doesn’t help the financial statements.

      • 0 avatar
        JimZ

        I do find it amusing how differently “enthusiasts” view cars and motorcycles.

        cars: “Man, I wish someone would give me a modern version of a ’50s or ’60s classic, but without all of those electronic nannies and doodads.”

        bikes: “Man, Harleys are obsolete pieces of junk! They’re stuck in the ’60s and wouldn’t know technology if it bit them on the arse!”

    • 0 avatar
      Pig_Iron

      Harley had a great engine in the Revolution. They killed it.

      Also, Indian seems to be doing fine.

      • 0 avatar
        JimZ

        “Harley had a great engine in the Revolution. They killed it.”

        that’s because no one was buying it. The V-Rod had the same problem that led to Victory’s death: no one was asking for a bike that was “like a Harley, but a bit more modern.” either they wanted something that looked classic (Harley or Indian) or they wanted something completely different.

        besides, I’m pretty sure the new “modular” powertrain coming late this year is based on the Revolution.

      • 0 avatar
        Garrett

        How many times has “Indian” gone under? I’ve lost count.

  • avatar
    Russycle

    Oh honestly:
    “While much of the media is focused on framing Donald Trump for Harley’s plight, the situation is a little more complicated. The president’s tariffs did indeed spur the EU’s retaliatory fees, but it was Europe that decided to place its crosshairs upon the iconically American motorcycle brand.

    We’re not really interested in who fired the first shot…”

    Trump imposed tariffs. EU retaliated. But figuring out who fired the first shot is so darned complicated. Really?

    Look, if you don’t know why they decided on Harley, fine. But who fired the first shot is really, really obvious.

    • 0 avatar
      ect

      Agreed. As everyone knows, when Country A unilaterally imposes tariffs on products from Countries B, C and D, in violation of trade agreements, those countries will immediately impose retaliatory tariffs on Country A. In doing so, they will target products and companies that will feel real pain, to make the whole experience as painful as possible for the malefactor.

      Simply put, Trump can’t win reelection without Wisconsin, and HD is in Wisconsin. China made much the same “Midwest calculus” in including soybeans in its retaliatory tariffs.

      • 0 avatar
        MBella

        It’s convenient how you fail to mention the tariffs that Trump was responding to.

        • 0 avatar
          James Charles

          MBella,
          List these tariffs, then look at US tariffs and trade barriers.

          I think you are overly one eyed here.

        • 0 avatar
          ect

          MBella, there was nothing to list. Trump wasn’t responding to any tariffs, he was picking a trade fight with all of America’s major trading partners – at the same time.
          Total stupidity, very bad for US manufacturers and farmers(among many others).

      • 0 avatar
        Daniel J

        Please. This “trade” war started a long time ago. EU has 10 percent tariffs on “all” cars. We have 25 percent tariff on light duty trucks. The EU maintains high tariffs on other goods from the U.S. The U.S. Imports 2x many goods, in dollars, than the EU. Who’s getting the benefit here? The EU.

        • 0 avatar
          JimZ

          but guess what? That “chicken tax” was retaliatory.

          • 0 avatar
            DenverMike

            The EU has a retaliatory 22.5% “Chicken” tax of their own against import pickups and vans. Yeah I’ll bet you’ve never heard of it, while it’s always the infamous, notorious US Chicken tax that gets all the press.

            Except any of the world’s pickups/vans that could possibly sell in the US in measurable numbers are already for sale in the US.

            But anyway, tariffs are easy to deal with. Automakers simply cut a check for those. No it’s Europe’s non-tariff and technical barriers that kill the deal.

            Clearly the US has the easiest regulations to deal with. Gas guzzlers are welcome, just as 3-cylinders. US regs are very “trust based”, while Europe requires hard, documented proof, that’s often vague in requirements (same as Japan).

            This is why the EPA was so easily fooled by VW and others. It’s clearly not a 2-way street.

        • 0 avatar
          Astigmatism

          The EU’s average tariff burden as of 2017 was 1.8%; the US’s average tariff burden as of 2017 was 1.7%. The idea that we suddenly needed to start raising tariffs against the EU unilaterally under the laughable pretext of national security is a sham. This is Trump’s fight.

          • 0 avatar
            James Charles

            Astigmatism,
            I agree, many conviently overlook reality to support their insecurity and that is the basis for many of the right wing socialists and that is what they are, all Trump supporters are socialists.

            They want government interference controlling trade. They don’t want fair trade.

      • 0 avatar
        slavuta

        Now I understand why HD makes such cheesy bikes. Too much noise and no satisfaction or refinement

    • 0 avatar
      don1967

      Globalists see Trump as the source of all the world’s problems, while others see him as the response.

      Scott Adams called it right… we’re all staring at the same screen yet seeing two completely different movies.

      • 0 avatar
        JimZ

        “Globalists”

        ooh, code word.

      • 0 avatar
        James Charles

        So, what is the response? What response has been of genuine benefit to the US?

        • 0 avatar
          don1967

          Border security. Booming economy. Record high employment among minority groups. An end to the tyranny of political correctness.

          I could go on, but because those watching a different movie cannot see this version it will only result in more partisan sniping.

      • 0 avatar
        Luke42

        “globalist” here. Trump isn’t the source of *all* the world’s problems, but removing his corrupt Russian-sponsored aministration from office would solve a lot of the easy problems.

        The Trump administration is actively blocking solutions to the hard problems.

        You misstate our position by suggesting Trump is the entire problem — he’s just the easiest problem to fix. Whenever (and however) he leaves office, we’ll be able to focus on the issues.

    • 0 avatar
      slavuta

      We just used to certain conditions, even if in a great picture this is not good for you. Trump makes big change and HD is just a small part. It has to get worse before it gets better.

  • avatar
    Zipster

    It would be a very safe bet that the overwhelming majority of Harley-Davidson owners are Trumpsters. Targeting their toy manufacturer was political reprisal.

    • 0 avatar
      JimZ

      “It would be a very safe bet that the overwhelming majority of Harley-Davidson owners are Trumpsters.”

      yep. most of them are worthless Boomers.

      • 0 avatar
        golden2husky

        “worthless Boomers”…LOL. Most millennials will never see the prosperity that those worthless boomers have. I’m an X BTW. But, yeah, way too many of them are Trumpanzees.

        • 0 avatar
          JimZ

          it’s easy to prosper when you’re growing up in the only major economy which wasn’t nearly obliterated during WWII. Having your competition crippled for decades does wonders.

      • 0 avatar
        slavuta

        At least boomers are tough crowd, not like bunch of snowflakes we see flaking out today. Got Prozac?

        • 0 avatar
          JimZ

          “At least boomers are tough crowd,”

          LOL, no they’re not. they’re all 60-70 years old, infantile, obese, diabetic blobs working on their second or third heart attacks.

        • 0 avatar
          Luke42

          Just say something less than positive about a Fox News host or Trump, and you can watch the average Boomer melt down faster than my toddler does when she doesn’t get candy at the grocery store.

          Boomers have no business throwing the term “snowflake” around.

          Fortunately, a few of them are still hippies. They’re at least interesting to talk to, and light on the Palinesque moralizing.

    • 0 avatar
      don1967

      Why is that a safe bet? Didn’t Trump also target Harley Davidson?

      Oh right… deplorables.

      Sorry to disrupt your narrative, but I’m behind many of Trump’s policies despite having a degree, a six figure income, a Volvo and centrist social values. It’s called open-mindedness.

  • avatar
    tylanner

    Attempting to have an intellectual discussion on this topic is certainly a sign of an unhealthy level of public disillusionment.

    • 0 avatar
      don1967

      There are intellectual points on both sides.

      You just have to get through the layers of hysterical partisanship, which is either Donald Trump’s fault or the mainstream media’s fault depending on which movie you’re watching. The important thing is to have popcorn.

  • avatar
    John

    Well we can now say arrivederci to your Ducati’s, Vespa’s, Moto Guzzo. Auf Wiedersehen to your BMW, KTM’s and Husqvarna Motorcycles becouse there will be reciprocal Taxes.

  • avatar
    Robbie

    As US, we are just getting what we deserve.

    • 0 avatar
      ToddAtlasF1

      Full employment, rising wages and a record stock market? It’s funny what happens when you don’t have a President who hates the country.

      • 0 avatar
        tomLU86

        @ToddAtlas , please.

        In 2016, Trump was certainly the best candidate. He correctly noted we are wasting a lot of money on ‘stupid wars’. He correctly pointed out that our trade partners rig the rules to their benefit (and this accounts for a good chunk our trade imbalance).

        Ronald Reagan, icon of the right (when convenient), imposed 25% tariffs on big Japanese bikes, targeted at saving Harley-Davidson. He pulled the Marines out of mid-East and didn’t go back.

        Now, let’s look at Trump.

        Unemployment statistics are distorted–it’s down, but the real rate is probably double. Many people have 2 or more jobs, to make ends meet.

        Rising wages? Uh, not really. Real increase, nil.

        Record stock market? Sure, all the money the Fed has pumped into the system, and our deficit spending.

        Trade: he’s fiddled at the margins, but things have proven much harder to correct than Trump (or myself) would have liked. I think he thought his attitude plus the White House, would do it. He tried though.

        We are wasting more money on defense than ever. His advisors are warmongers. Our deficits our at record levels, during a ‘prosperous’ economy.

        The Trump-haters have succeeded in derailing his Presidency and poisoned our relations with Russia. For that alone, I will continue to support Mr. Trump. Their attempt to overturn the election with this moronic investigation that proved nothing failed, fortunately for the US.

        Still, we’re living on borrowed time. Enjoy the party today. And if you like cars, get a good one while you still can (new or used).

        • 0 avatar
          Art Vandelay

          But the fed has been raising interest rates more or less since he was elected. Not that that’s bad, but it isn’t like they have been greasing the rails like the prior decade.

      • 0 avatar
        James Charles

        Todd, what BS to think Trump is responsible for the US economy. Check the economic data and you will see this upward improvement in the US economy is linear and started 6 or 7 years ago.

        So, when then US economy tanks in a year or so, who will you blame? The Dems? The EU? The Chinese, Mexicans?

        You will blame all but yourselves.

        • 0 avatar
          slavuta

          Presidents don’t run economy. But by removing certain regulations, they can create conditions for economy to improve via more business-friendly environment.

        • 0 avatar
          Art Vandelay

          And James Charles is why you don’t ban posters. They just get a new account. You have to black hole them so they post away but nobody can actually see their posts.

        • 0 avatar
          tomLU86

          The upward improvement of the Obama/Trump economy has been illusory and weak.

          For all of the stimulus (the epic deficits, the quantitative easing), things should be better.

          Obama had ZERO real interest or less. Under Trump, the Fed has slightly raised.

          Both President’s have continued their moronic predecessor’s pointless wars, albeit at a lesser pace.

          Candidate Trump told truths the others could not: he (and Sanders) had nothing to lose; the others are part of the Deep State that has created our problems, which benefit the elite at the expense of people like the commentariat here.

          One difference: the Obama administration actively used the FBI and CIA to try to handcuff and trip up the President-elect.

          In my lifetime, every President has been worse than his predecessor–until Trump.

          That’s a very low bar.

          And to a large extent, the US public is to blame, for electing people who make promises that can’t be kept, and once elected, use gimmicks to create the appearance of doing something, while making things worse.

          When you’re sick or injured and go to doctor or hospital, chances are, you will incur more pain or discomfort while in their care (short run) to get well (long run).

          Any honest politician who promises short-term pain is DOA.

          We get what we deserve.

      • 0 avatar
        jkross22

        Todd, attributing rising wages and stock market increases with some mythical Trump strategy is hilarious. History didn’t start in 2016 no matter how much you want it to. Your team red specs are ruining your eyesight.

        And rising wages? You’re buying that? Full employment too, huh?

        • 0 avatar
          ToddAtlasF1

          Are you still buying Russian collusion with the Trump campaign? Did you buy that the economy would collapse the day he was sworn in? Did you buy that we’d have a nuclear war with North Korea? That we’d round up the LGBTQ+ and anyone foreign? That Comey was bad before he was good? That Obama wasn’t spying on the Trump campaign? Democrats must be really smart, or else it would be really tough for them to know what they believe on any given day.

  • avatar
    Mackie

    No sympathy for Harley Davidson. My partner’s Harley is a poorly built death trap that’s been in the shop more than it’s been on the road. No matter where they build, their bikes will always be total crap. Good riddance.

  • avatar
    stingray65

    Funny the concern about Harley when they are still earning a profit despite the tariffs and downturn in riding age buyers in the US. Tesla would love to be earning as much, and yet their stock is on fire (correction: their cars are on fire).

  • avatar
    Dale Houston

    Huh. I didn’t know HD made anything but clothes for fat old people.

  • avatar
    golden2husky

    One of the compelling reasons other countries buy Harleys is that they are uniquely American. Manufacturing them elsewhere seems counter to this and would dilute the brand. That said, I work with a surprising amount of motorcycle riders. None ride Harleys. They view them as “new antiques”. The best analogy they came up with was to think if Chevy could make a brand new 1970 Chevelle would you want it? As a playtoy, hell yes. As a daily, no way. That is what pretty much sums up a Hog according to them. I have no horse in the race but that seems to be the feelings amongst the riders here. Which is fine IMO because that is what the manufacturer wants them to be.

    • 0 avatar
      2drsedanman

      Good analogy and insight.

    • 0 avatar
      James Charles

      Golden2Husky,
      I think you are incorrect. A minority will buy them because Harleys are American.

      Harley buyers buy them to display their view and life style, like a pickup. Many buy pickups and many more buy a bike other than a Harely. If these products didn’t exist they would buy whatever, from whatever country to display their life style.

      So, ISIS are idolising Americans because they want pickups?

      • 0 avatar
        Art Vandelay

        But the “lifestyle” displayed by a Harley is a fairly uniquely American one, as with a pickup (as a lifestyle vehicle anyway…plenty of other reasons to buy a truck).

      • 0 avatar
        JimZ

        “A minority will buy them because Harleys are American.”

        I don’t think it’s a minority. it certainly factored into why I bought the two I did. the other main reason is that they offer a dizzying array of options and configurations so you can “fit” it to your hind end satisfactorily.

        the Japanese cruisers come off as somewhat ersatz. they’re all very similar to each other, and in most cases come in one color (two if you’re lucky) and might have one optional seat. they’re good bikes, don’t get me wrong, but they’re kind of “tryhard” and somewhat sterile in comparison.

  • avatar
    tomLU86

    @goldenhusky,

    I never thought of a Harley like that, great insight.

    I would actually like to buy a “new” 1971 Chevelle, and if I could for $24k, I would. …but what I really want is a “new” 1986 VW Golf GTI. I’d rather pay $25,000 for a NEW one of those, than the current GTI (admittedly, the current car is objectively superior, no argument. But I like the old, simpler car, it works for me, thank you).

  • avatar
    -Nate

    Very interesting thread .

    I’m a Baby Boomer who’s old and fat , never had a heart attack nor food stamps, unemployment, a car loan or the rest of the crap so many dig deep holes to get for that I don’t know .

    My Son is 41Y.O. and a rabid trump supporter, thinks vaccines will kill him (?! WTH ?!) and is stock piling guns although he thinks the Bible is B.S…..

    Neither of us will fit the holes most here want to put us into .

    I fondly remember both my 1965 Harley 74″ PanHead and my 1937 EL 61″ KunckleHead, both were rebuilt by me from the wheels up and gave good service in spite of being old fashioned, heavy, ponderous and so on .

    The PanHead wasn’t a good mountain bike, the KnuckleHead I rode fast and hard in Guatemala and loved most of it, it was comfy over _very_ bad roads, the original triple spring leaver saddle gave good support .

    The foot clutch and tank shifter wasn’t much fun on greasy cobble stones when going up hills in the rain at night….

    It wasn’t very heavy feeling, unlike my PanHead, that weighed 800# stripped down .

    I hope America can still support at least _one_ Motocycle company .

    -Nate

    • 0 avatar
      -Nate

      Oh yeah ;

      In addition to being old, I’m *very* Conservative and proudly so .

      I’m not fond of the P.O.T.U.S. but I won’t be surprised one bit when he wins the next election .

      The DNC has been grabbing defeat from the jaws of victory for some time, now, if they don’t wise up they don’t deserve to win .

      -Nate


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