EU punitive tariffs threaten European Harley-Davidson dealers

Recent developments in the transatlantic trade conflict highlight the potentially devastating impact of planned EU punitive tariffs on Harley-Davidson and its more than 280 affiliated European dealers.

Background to the US punitive tariffs on steel and aluminum

US President Donald Trump has announced that he will impose tariffs of 25 percent on steel and aluminum imports from March 4, 2025, with no exceptions for allied countries. The aim of this measure is to strengthen domestic industry and ensure national security. Trump argues that these tariffs will make the US less dependent on foreign imports and secure domestic jobs.

Reaction of the European Union

The European Union has reacted sharply to the US tariffs and is planning countermeasures. Back in 2018, the EU introduced punitive tariffs on certain US products in response to earlier US tariffs, including motorcycles with an engine capacity of more than 500 cubic centimeters, which directly affected brands such as Harley-Davidson. These tariffs were later suspended, but could now be reactivated or even increased.

Rapid activation of EU punitive tariffs – but at what cost?

In the most recent chancellor debate between Chancellor Olaf Scholz and opposition leader Friedrich Merz, there was an intense discussion on the topic of punitive tariffs. Merz emphasized that Germany could negotiate with the US president on an equal footing with regard to punitive tariffs, while Scholz pointed out that the list of countermeasures had already been drawn up and could be activated within an hour. Scholz also emphasized that the American punitive tariffs would particularly harm German industry.

Harley-Davidson back in the spotlight – a strategic mistake?

However, by targeting Harley-Davidson once again, the EU appears to be overlooking the importance of the company's European operations. Harley-Davidson has numerous branches and employs many people within the EU. By imposing punitive tariffs on Harley-Davidson products, the EU could inadvertently harm its own economic interests and damage European companies and workers.

This situation highlights the complexity of trade conflicts and the need to carefully weigh up potential consequences before taking measures that could have a negative impact on one's own economy.

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Impact on European Harley-Davidson dealers

The reintroduction or increase of punitive tariffs on Harley-Davidson motorcycles would have serious consequences for European dealers. Back in 2021, the Harley-Davidson Dealers Association warned of the existential threat posed by such tariffs. At that time, there was talk of increasing the total tariff burden to 56 percent, which would have had a massive impact on dealers' competitiveness.

Why do customs duties exist in the first place?

Customs duties traditionally serve to protect the domestic economy from foreign competition, generate government revenue, and act as an instrument of trade policy. However, they can also lead to trade conflicts if they are perceived as protectionist measures.

Why punitive tariffs on Harley-Davidson don't make sense

1. Punitive tariffs hit European retailers and jobs

Harley-Davidson has over 280 authorized dealers in Europe. These dealers are medium-sized companies with local jobs that would be directly affected by punitive tariffs. Higher import costs would make motorcycles more expensive, leading to fewer sales. This would jeopardize jobs in the European motorcycle industry, from dealers to mechanics.

2. Customers in Europe would be disadvantaged

Harley-Davidson has a loyal customer base in Europe, who often save for years to buy their dream bike. Punitive tariffs would artificially increase the price of motorcycles and make them more difficult to purchase. This would not only cause economic damage, but also restrict consumers' freedom of choice.

3. Punitive tariffs on Harley-Davidson will not solve the trade problem

The EU would impose punitive tariffs on Harley-Davidson achieve a sustainable solution to the trade conflict. Instead, it would complicate negotiations and possibly lead to further escalation. Harley-Davidson is a symbol of American motorcycles, but it is not a key industry that significantly influences the trade balance.

4. Harley-Davidson already manufactures some of its products outside the USA.

Following the latest punitive tariffs, Harley-Davidson has already relocated part of its production to countries such as Thailand in order to avoid import duties in Europe. Unfortunately, this was also communicated at the time, which ultimately had a negative impact on the dismissal of the lawsuit. Harley-Davidson had filed a lawsuit against the EU punitive tariffs, but the European Court of Justice ultimately dismissed the case. The court argued that the relocation of production was primarily intended to circumvent the tariffs and was therefore not economically justified. In my view, new punitive tariffs could still be ineffective, as they would only have a limited impact on US production and would instead primarily burden European dealers, customers, and suppliers.

5. Impact on European suppliers

In addition to authorized dealers, numerous European suppliers to Harley-Davidson are also affected. Companies from Germany, Italy, and other EU countries supply parts, accessories, and special components for Harley-Davidson motorcycles. A decline in sales volume due to higher import costs would also affect these suppliers, thereby jeopardizing numerous additional jobs.

Well-known European suppliers include the Italian brake specialist Brembo, which supplies braking systems specially developed for Harley-Davidson. There are also indications in the field of electronics that Bosch electronic components such as CDI units (Capacitor Discharge Ignition) and ECUs for Harley-Davidson models. Bosch also supplies ABS components, which are now standard equipment on Harley-Davidson models. This close connection with European suppliers shows that punitive tariffs not only affect dealers and end customers, but also jeopardize the entire value chain in Europe.

6. European Harley-Davidson community joins the resistance

This time, the European Harley-Davidson community will rebel against the planned EU punitive tariffs. Particularly in view of the upcoming federal elections, we must seize this opportunity to take joint action against blind activism, primarily on the part of CDU and SPD MEPs.

7. Avoid escalation spirals

The US could respond by imposing tariffs on European motorcycles from BMW, Ducati, or KTM. This would only further exacerbate the trade conflict and harm the entire motorcycle industry—including European manufacturers.

Wolf's conclusion

Punitive tariffs on Harley-Davidson would not only be economically damaging for European dealers and customers, but also politically questionable. They do not solve any structural trade problems, but primarily affect European companies and jobs. European suppliers such as Brembo and Bosch, which supply essential components for Harley-Davidson, would also be particularly affected. A slump in sales would have a direct impact on their business and jeopardize numerous jobs.

Strong opposition from the Harley-Davidson community will come!

In this trade conflict, Trump is merely demanding a level playing field and pointing out that there is currently an imbalance in favor of the EU. Instead of responding with further punitive tariffs, which primarily burden its own economy, the EU should develop a well-considered strategy. The European Harley-Davidson community will take a clear stand against these measures this time and increase the pressure on politicians. The initial preparations have already been made!

In view of these economic consequences, the legitimate question arises: Are our politicians even competent, Is this about making far-reaching decisions, or is it just blind activism without any thought for the real consequences? 

If politicians are unable to find smart and economically viable long-term solutions, then a new approach is urgently needed to protect European companies and jobs.

Text: Harleysite / Volker Wolf

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