Harley-Davidson Inc. HOG 9.68%
was hit by a European Union import decision which the motorcycle maker said would impose a 56% import tariff on its products and prevent it from operating competitively in Europe.
The Milwaukee-based company reported the move along with better-than-expected sales and earnings for the first quarter, the news of which took the stock to a new multi-year high.
Harley-Davidson has been one of America’s most high-profile victims of recent trade disputes, after the EU imposed a 25% duty on its motorcycles and other American products in 2018. The levies were a response to tariffs imposed by the Trump administration on steel and aluminum from European and foreign producers.
On Monday, Harley-Davidson said the Belgian Economy Ministry, on behalf of the EU, notified the company that it was revoking an agreement that allowed it to supply certain motorcycles produced at its facilities to Europe. international manufacturing at tariff rates of 6%.
Harley-Davidson said the EU ruling would apply to its entire range and subject all products – regardless of origin – to a 56% import tariff in the trade bloc from June 1st.
The European Commission, the EU’s executive arm, declined to comment.
The company also released its quarterly result on Monday. Harley-Davidson profits soared to $ 259.1 million in the first quarter, from $ 69.7 million in the last year’s quarter. Revenue improved to $ 1.42 billion from $ 1.3 billion.
Harley-Davidson said motorcycle sales rose 30% in North America for the first quarter. As a result, the company has raised its 2021 forecast for motorcycle revenue growth to between 30% and 35%, up from its previous projection of 20% to 25%.
Harley-Davidson shares rose 9.7% on Monday, closing at $ 44.29, its highest closing price since 2018.
Harley-Davidson had reduced its European tariff bill by sending motorcycles made in Thailand to Europe. With the end of that deal, the company now finds itself grappling with EU trade authorities over a tariff imposed on motorcycles no longer produced in the United States.
The motorcycle maker said it plans to file an immediate legal challenge against what it called an unprecedented ruling that “underscores the very real harm of an escalation of the trade war to our stakeholders on both sides of the world. Atlantic”.
The U.S. Trade Representative’s office declined to comment.
Harley-Davidson was made aware of the EU tariff hike on Friday evening, a person familiar with the matter said.
As the EU’s first round of tariffs hit other high-profile American products, such as jeans made by Levi Strauss & Co. and Kentucky bourbon, the vocal supporter of the then president, Donald Trump, has pushed Harley-Davidson into the limelight as an American victim of the commercial beards traded in recent years between the United States and Europe and China.
Harley-Davidson said in 2018 that EU tariffs would increase the cost of each bike shipped to the trade bloc from the United States by about $ 2,200. Rather than raising prices, the company said it would move production of motorcycles for the EU market outside the United States, prompting Mr. Trump to accuse the company of lifting the White flag.
More recently, the United States and the EU suspended some import tariffs. In March, the two sides agreed to suspend tariffs on wine, baggage, produce and other goods linked to a long-standing dispute over government subsidies to Boeing. Co.
and Airbus SE.
Washington has also suspended tariffs on British luxury goods, including scotch.
Europe, the Middle East and Africa were among Harley-Davidson’s largest markets outside of the United States, but its first quarter results showed nearly 3,000 fewer motorcycles sold in the sales region, ie a decrease of 36% compared to the previous year.
The company attributed the drop to shipping delays linked to the pandemic and its decision to stop selling some popular motorcycle models in the region.
Harley-Davidson will soon be offering a new motorcycle known as the Pan America and designed for on-road and off-road use. Company executives predict that the model will be popular in Europe.
The EU’s pricing decision comes at a time when the company has scaled back its sales activities in smaller foreign markets to focus on North America, Europe and Japan. Harley-Davidson is in the process of reviewing its sales and production strategies under the leadership of longtime managing director Jochen Zeitz, who was selected for the first position early last year. The company cut motorcycle production in 2020 as part of a plan to reduce inventory of bikes at dealerships and raise prices for used models.
—Bob Tita and Colin Kellaher contributed to this article.
Write to Alistair MacDonald at [email protected]
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