Harley against EU: tariffs will not rise to 56% for the time being

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Harley against EU: tariffs will not rise to 56% for the time being
Harley-Davidson

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traffic & business

Harley against EU: tariffs will not rise to 56% for the time being

Harley-Davidson in customs dispute with the EU
EU and USA agree

The EU has revoked Harley-Davidson a special permit in customs law. The tariff on Harley motorcycles should increase to 56 percent. The EU and the US have now agreed to suspend tariffs on the core issue of aircraft. An expansion to all punitive tariffs is in the room.


Jens Kratschmar

June 16, 2021

In this article:

  • EU and USA agree
  • Manufacturer associations are calling for the abolition of all tariffs
  • Suspended is not canceled
  • Germany core market
  • Conclusion

With effect from April 19, 2021, the European Union Harley-Davidson A special permit in customs law was revoked, which enabled Harley to import motorcycle models that were not made in the US into the EU at the low rate of six percent without a penalty. If this decision remains legally valid, the EU will levy a 56 percent import duty on all Harley-Davidson products from June 2021, regardless of their true origin: even Harleys from Thailand will then be subject to customs “Made in USA”. Although this additional 25 percent punitive tariff was suspended shortly before it came into effect, the withdrawal of the BOI for Harley and the 25 percent punitive tariff, which is already in force, currently add up to 31 percent of the import of American motorcycles from Harley. According to the latest decisions, this level of punishment also seems to be wobbling.

EU and USA agree

The customs dispute continues to move. After 17 years of dispute over subsidies for the aircraft manufacturers Airbus and Boeing, which triggered the Trump escalation, the US and the EU agreed on June 15, 2021 to suspend the punitive tariffs as so-called countermeasures for five years. The wording of this initially only applies to the core topic of large aircraft. Since these were the trigger, however, suspended punitive tariffs on all other goods, including motorcycles, would be logical – and welcome. We are eagerly awaiting the reaction of manufacturers and associations. Inquiries from MOTORRAD are ongoing.

Manufacturer associations are calling for the abolition of all tariffs

The association of European motorcycle manufacturers and its transatlantic counterpart USMMA recently called on the EU and the USA to stop the negotiations on punitive tariffs for motorcycles and all goods that are not directly related to the tariff dispute over steel and aluminum in the negotiating round on 15 June 2021 to be put on the agenda and completely abolished. So far, this was planned for the end of 2021 and by then American motorcycle manufacturers – Harley-Davidson and Indian Motorcycles – would have to pay up to 31 percent duty (6 + 25 percent). ACEM therefore calls on the President of the European Commission, Ursula von der Leyen, and the President of the United States, Joe Biden, to use the EU-US summit in Brussels on June 15 to show their readiness at the highest level to declare that the steel and aluminum dispute will be settled as soon as possible.

“ACEM calls on the transatlantic leadership to ensure that negotiations on eliminating steel overcapacity are concluded immediately, rather than waiting six months in which hundreds of millions of euros in money from outsiders are being spent on unjustified tariffs, rather than on investments and Invest important research and development to rebuild and green both the EU and US economies”, said Antonio Perlot, Secretary General of ACEM.

Suspended is not canceled

With the introduction of the punitive tariffs of 25 percent in 2018, Harley has been able to keep the customs duties for certain models and products from non-US origins at six percent since 2019 using the Binding Origin Information (BOI). Including all motorcycles over 500 cubic meters that have so far been built in Thailand for the European market. The BOI was revoked from Harley by resolution of the EU on March 31, 2021 with effect from April 19. As a result, the tariffs will rise by a further level with 50 percent punitive tariffs to a total of 56 percent import duties in June 2021. Where the product was actually made is not relevant. The background to this is the protracted disputes and rulings on illegal government subsidies to Airbus from the EU and Boeing in the USA.

Now the EU has suspended the next level of punitive tariffs until the end of 2021, so the special regulation of the origin of the goods is currently invalid for Harley. The EU continues to levy 31 percent tariffs on all Harley goods. The situation for Harley has not really improved, it is just less bad.

Jochen Zeitz, Chairman, President and CEO of Harley-Davidson: “We are encouraged by today’s announcement that tariffs on our products will not increase from 31 percent to 56 percent. This is the first step in the right direction in an argument that was not caused by us. Harley-Davidson employees, dealers, interest groups and motorcycles have no place in this trade war. These tariffs give other motorcycle manufacturers an unfair competitive advantage in the EU. European manufacturers only pay up to 2.4 percent tariffs to import their models into the USA. We want free and fair trade.”

Strange: On March 5, the EU and the USA agreed to mutually waive the previous punitive tariffs in the course of the Boeing / Airbus decisions for four months until June, in order to renegotiate the agreements during this time. It is unclear where the EU’s impulse came from to remove the BOI from Harley. After the offensive reaction of Jochen Zeitz, CEO of Harley-Davidson and the advance announcement of good quarterly figures at the end of April 2021, the share blew a heavy tailwind on Wall Street.

Harley against EU: tariffs will not rise to 56% for the time being

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Germany core market

The EU’s customs policy is likely to be particularly bitter for Harley’s new Hardwire strategy, in which Germany is one of the core markets and the recently introduced, very European Harley-Davidson Pan America would lose so much of its competitiveness. Also the personnel reinforcements of Harley in Europe Kolja Rebstock from Mitsubishi and Nils Buntrock, formerly Audi and Bugatti, should be deprived of a lot of clout with the yoke of customs in the neck.

Conclusion

Even Harleys from Thailand for the EU from the USA from June. The move not to set up Harley’s productions in the States turns into a boomerang. Perhaps the Berlin Economic Development Agency will now renew the invitation from a Harley factory in Germany. It worked out pretty well at Tesla.

But the feared 56 percent inches are off the table for now, but the BOI is still invalid, something for Harley “only” 31 percent means.

The manufacturers’ associations of the EU and the USA are now calling on the governments to completely drop tariffs on motorcycles

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