Quick Escalation – Tariffs and Motorcycles

It’s gone from bad to worse in a day. Harley-Davidson was quick to state they would move some production overseas to get around the tariffs that are being levied on the company’s motorcycles by the European Union in response to the US tariffs on European steel and aluminum. The US administration was quick to respond to Harley-Davidson’s announcement claiming that the company would be taxed like never Harley-Davidson street 750before if they tried to bring offshore built motorcycles back into the United States.

Is this what the motorcycle industry needs right about now? Harley-Davidson was already feeling the crunch of changing demographics and falling sales volume just like the rest of the industry in North America. There is no getting around the aging of the market. For Harley-Davidson, the Street 500 and 750 models were suppose to address the issue by getting the “young riders” back in the game but those two bikes haven’t turned the tide. Europe represents the largest share of Harley’s market outside of North America. Cutting that market off would be hugely detrimental. Harley-Davidson stated the company would not pass the price increases along to European consumers – hoping perhaps the issue would be resolved. But it is only getting worse.  The US is now threatening potential tariffs on European automobiles which represent some big and powerful players – Volkswagen, Mercedes, BMW….  The logical expectation from that scenario is that European motorcycles would be lumped into the same tariff action – tit for motorcycle tat. Up goes the price of every European marque which would have a substantially negative effect on the industry considering the market share the US represents for brands like Triumph, Ducati and BMW. If one was aiming to squeeze riders this would do it as there are no US built alternatives to non-cruiser motorcycles and therefore shrinking the sales of motorcycles even further.

Is anyone going to blink in this trade debacle that will do far more damage than good? Will calmer heads prevail? We don’t seem to be seeing any.