Harley-Davidson is one motorcycle maker that can breathe a little easier this holiday season, and here's why. On December 19, 2023, the US and the European Union officially agreed to extend their existing suspension of aluminum and steel tariffs.
The new deadline is set to expire on March 31, 2025, by which time a more permanent deal will hopefully be hammered out between the two economic superpowers. Yes, you read that correctly: This is a pause, not a permanent solution. The European Commission refers to it as a "prolonged tariff suspension," to be more precise.
That's Good, I Guess, But How Did We Get Here?
The year was 2018. The US, under then-president Trump, decided to introduce tariffs on a total of about €6.4 billion (or about $7,033,984,000 USD) worth of steel and aluminum exported from Europe into the US. The officially stated reason at the time was "to protect our country and our workers."
In response, the EU announced a plan to enact €2.8 billion (about $3,077,312,000 USD) worth of its own tariffs on aluminum and steel exported from the US to Europe as a balancing measure. Additional taxes were to be imposed on a number of American goods, including bourbon and motorcycles over 500cc.
Soon after the opening salvos of this trade war rang, Harley-Davidson spokesperson Michael Pflughoeft said, “Import tariffs on steel and aluminum will drive up costs for all products made with these raw materials, regardless of their origin. Additionally, 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."
Indian Motorcycle, in the meantime, continued to assemble bikes for its European markets at its factory in Poland. Therefore, it would not be directly affected. Harley-Davidson shifted production of bikes for the European market to its factory in Thailand, as an effort to stave off the tariffs.
Once current US president Biden took office, manufacturer trade organizations on both sides of the ocean increased pressure on officials to resolve this tariff dispute. But in April 2021, the EU revoked H-D's Binding Origin Information (BOI) credentials, which essentially meant that even though the bikes it was shipping into Europe came from Thailand, it would still be charged a tax rate of an eye-watering 56 percent.
It was clear that the EU wasn't going to simply take the US tariffs lying down. Meanwhile, that left motorcycle enthusiasts and other regular people quite literally paying the price as the two bodies continued to duke it out.
Finally, Some Relief
On October 30, 2021, the EU and the US finally agreed to a pause on their trade dispute over steel and aluminum products. While it wasn't a full stop or a permanent solution, at the time, Harley-Davidson CEO Jochen Zeitz said, “We are excited that this brings an end to a conflict that was not of our making, and in which Harley-Davidson had no place. This is an important course correction in US-EU trade relations, that will allow us to further Harley-Davidson's position as the most desirable motorcycle brand in the world."
In January 2022, the US imposed a quota system allowing up to 3.3 million metric tons of steel and 384,000 tons of aluminum produced in the EU to be imported into the US without tariffs. Higher amounts would, however, be subject to tariffs.
At the same time, the EU lifted the retaliatory tariffs it had initially imposed on its own US imports. However, this detente had a deadline of December 31, 2023, which is why the December 19 announcement of a prolonged pause on tariffs from both parties is significant.
What Happens Now?
This pause is intended to provide additional time for the EU and US to work together to find a solution on what they refer to as a Global Arrangement on Sustainable Steel and Aluminum (GSA). How long that will take, and what terms may eventually be reached, are both open questions at this point.
For the moment, though, European Harley-Davidson fans can rest a little easier until at least the end of March 2025. It's far from a perfect solution, but it's what we've got at the moment.
