Harley-Davidson responds to threat of European Union tariffs on Harley bikes

Harley-Davidson Inc. has responded to the European Union’s threat to impose tariffs on Harley motorcycles, saying it could have a significant impact on sales and customers.

European Commission President Jean-Claude Juncker has identified Harley-Davidson bikes and Levi jeans as targets for “countermeasures” the EU has been preparing in retaliation for President Donald Trump's plan to place tariffs on foreign steel and aluminum.

Trump has said he would impose a 25% tariff on steel imports and a 10% tariff on aluminum imports, a move welcomed by the U.S. steel industry but opposed by manufacturers of many products that have a high metal content.

Roughly 16% of Harley-Davidson’s sales are to Europe.

In a statement, Harley now says, “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."

This wouldn’t be the first time that Milwaukee-based Harley-Davidson, the world’s largest manufacturer of heavyweight motorcycles, has faced tariffs in trade disputes. The EU threatened tariffs on its bikes in 2003 when President George W. Bush sought taxes on imported steel.

In India, where big touring motorcycles and cars are saddled with a 100% import tariff, Harley's sales have grown at a rapid clip.

That's largely because the company has been able to get around the tariff by assembling bikes there, something it's done in that country since 2011.

Harley-Davidson plans to open a motorcycle assembly plant in Thailand this year, as the tariff on motorcycles assembled in the United States is about 60% in Thailand, according to the company.

Harley is recognized in Japan as an American icon, but it hasn't always been easy to sell heavyweight motorcycles there, either.



Years ago, Japanese motorcyclists were required to pass a special exam if they wanted to ride large touring bikes such as Harleys. One of the tests was to ride across a balance beam. Only about 2% of riders passed the test.



In 2005, Japan repealed a law that prohibited motorcyclists from carrying a passenger on major highways. That helped boost Harley-Davidson sales.

In the United States, motorcycle manufacturers are now caught between two customer demographic trends: millennials who aren’t widely embracing the motorcycling lifestyle, and baby boomers who are aging out of riding.

Harley's 2018 performance will be key for investors as, at the beginning of 2017, management projected a sluggish outlook and then revised it downward.

The company said it expects to ship between 231,000 and 236,000 motorcycles to dealerships this year after shipping 241,498 in 2017, the lowest in six years.

Elsewhere in Wisconsin, Gov. Scott Walker said Tuesday that Trump's proposed tariffs are an "existential threat" for companies such as plastics-maker Bemis Corp.

The proposed tariffs on imports could squeeze Neenah-based Bemis, which relies on ultra-thin aluminum for packaging it makes at its sprawling industrial products plant on Oshkosh's west end, Walker said during a tour of the company.

Walker toured Bemis and food processor Seneca Foods in Janesville Tuesday as part of his rare public break with Republicans on trade policy. Bemis employs 5,000 workers in Wisconsin, while Seneca has 1,200 employees across nine plants.

"Bemis and Janesville are two very specific examples of companies here in the state of Wisconsin that can be negatively affected (by the tariffs)," Walker said. "You have really an existential threat to businesses in the United States."

Walker said he told U.S. Secretary of Commerce Wilbur Ross in July that he was concerned a tariff on aluminum could adversely affect companies like Bemis. Walker said he felt Ross was receptive to those fears, which made Trump's announcement last week surprising.

Trump said he is moving ahead with tariffs on imported aluminum and steel despite calls from House Speaker Paul Ryan to avoid creating what Ryan called an unnecessary trade war.

RELATED: Trump continues to back aluminum and steel tariffs despite Republican fears of a trade war

“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan," said AshLee Strong, Ryan's spokeswoman. "The new tax reform law has boosted the economy and we certainly don't want to jeopardize those gains.”

Warning of economic fallout, congressional Republicans and industry groups pressed Trump on Tuesday to narrow his plan for across-the-board tariffs on imports of steel and aluminum. Trump appeared unmoved, declaring: “Trade wars aren’t so bad.”

The president said he planned to move forward with special tariffs on imported steel and aluminum, contending the U.S. has long been “mistreated” in trade deals.

“We’re doing tariffs on steel. We cannot lose our steel industry. It’s a fraction of what it once was. And we can’t lose our aluminum industry,” Trump said during a joint news conference with Swedish Prime Minister Stefan Lofven.

The president’s pledge for actionwould be in line with a one of his campaign promises.

Republican Sen. David Perdue of Georgia, who opposes the tariffs, said after meeting Tuesday with White House chief of staff John Kelly that the administration was willing to consider his views. “Absolutely. There’s an openness now,” Perdue said.

But those views sounded more like wishful thinking after Trump’s news conference, in which he reiterated his plans to impose the tariffs of 25 percent on steel imports and 10 percent on aluminum imports. He said he’d respond to unfair treatment by foreign countries and huge trade deficits. “We’re going to straighten it out and we’ll do it in a very loving way,” Trump said.

The president also reaffirmed the possibility that Canada and Mexico might not face the tariffs if they are willing to offer more favorable terms under the North American Free Agreement, which is being renegotiated.

USA Today, the Oshkosh Northwestern and the Associated Press contributed to this report.