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As of yesterday, JEFTA is finally law in Europe and Japan, and the trade agreement is a big deal for both parties involved, as well as motorcyclists.

What? You haven’t heard of the Japan Europe Free Trade Agreement (JEFTA)? For our European readers, it is a critical piece of legislation, as this treaty of trade is set to make Japanese motorcycles a bit cheaper in Europe.

Agreeing to a schedule of tariff reductions, JEFTA achieves two goals that affect the motorcycle industry. First, it reduces the modest taxation of Japanese motorcycles, mopeds, scooters, and parts into the European Union.

Second, JEFTA helps align the European and Japanese emission standards for vehicles, thus unifying both countries under a single emission criteria for vehicles.

We have already reported on the European Union’s 25% tariff increase (6% to 31%) on American-made motorcycles, and how those import taxes are going to affect in particular Harley-Davidson. The short version: not well.

Seeing that writing on the wall, Harley-Davidson has responded to Europe’s retaliatory tariffs, though it is perhaps not the response that the American government was hoping for when it began taxing aluminum and steel from European Union member states.

As such, Harley-Davidson plans to shift its production for motorcycles destined to the European market from its factories in the United States to it facilities abroad.

“Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option,” the iconic American brand is reported saying in a regulatory filing.

Today is the day. Today is the day that the European Union begins taxing the importation of motorcycles from the United States into Europe.

A retaliation to the Trump administration’s tariffs on aluminum and steel, the EU will now impose a 25% tariff increase on all motorcycles, 500cc and up, coming from the United States.

This means that the new tariff provisions will affect both Harley-Davidson and Indian, but will not affect Zero Motorcycles, as electric motorcycles are not included in the trade war provisions.

Strangely enough, we have talked about trade wars several times before, here on Asphalt & Rubber, as the Trump administration has been keen to use this tool in its toolbox, often with effects that reach into the motorcycle industry.

The first time around, we talked about how the Trans-Pacific Partnership (TPP) affected the motorcycle industry, namely Harley-Davidson, and how the United States' withdrawal from the agreement would likely be a negative effect for US motorcyclists.

We have also had to talk about how fighting over beef imports could lead to possible tariffs on small-displacement European motorcycles in the United States, a tariff that would seriously hurt Piaggio/Vespa scooter sales and KTM dirt bike sales.

This week a new specter is on the horizon, as the Trump administration is eyeing tariffs on both steel and aluminum, at 25% and 10% a pop - respectively.

Naturally, the increase in the cost on importing raw metals into the USA is going to have an adverse effect on manufacturing-based businesses, but not all of these companies are affected equally when tariffs are imposed.

So, let's take a look at what this really means for the American motorcycle industry.

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Feeling the effects of international trade, and a future without the TPP, Harley-Davidson is reported by the New York Times to be opening a new factory in Thailand – country that places a 60% tariff on motorcycles in Harley-Davidson’s relevant market.

The news comes at the dismay from Harley-Davidson’s workforce, which has just seen its ranks diminished by 118 jobs at its York plant, in Pennsylvania. Despite this, Harley-Davidson says that the move is about growing sales abroad, not losing jobs in the United States.

“This is absolutely not about taking jobs out of the United States,” said Marc McAllister, the Managing Director of Harley-Davidson’s international sales, while talking to the NY Times. “This is about growing our business in Asia.”

Of course, if Harley-Davidson wasn’t having to side-step a 60% tariff to sell motorcycles in Thailand, one has to wonder if the Bar & Shield brand would be building a factory in Thailand in the first place…

Several publications are reporting the possibility that the European Commission (EC) could be preparing to implement a European-wide limit of 100HP on motorcycles when the European executive power meets this summer. The issue arises after France instituted a 100HP ban on new motorcycles, causing the country to be out of line with the rest of European Union. France’s new law places an undue burden on manufacturers, who must now make a French variant for each new EU motorcycle model (or just not offer the bike in the French market all-together), and as such the EC aims to bring the EU under one policy.

This has created cause for alarm in the industry (or just in sensationalist journalists) who fear that the EC could place 100HP limits across the entire EU, along with other hindering provisions as well (mandatory ABS brakes seems to be the other main concern), in order to bring balance to the Union’s approach on motorcycles. If that sounds ridiculous to you, then you’re in the same boast as us. Considering how the EC and EU directives, regulations, and decisions actually operate, the real likelihood seems to be the possibility of France’s law being repealed, but that doesn’t mean activists have any less cause for alarm.