Hoping to pressure Harley-Davidson into keeping its production in the United States, President Trump this weekend tweeted words of encouragement to riders who planned to boycott the American motorcycle brand. This shouldn’t be too surprising, considering that Harley-Davidson has increasingly found itself at odds with the White House, primarily over President Trump’s trade negotiations and agreements. The tension started with the United States withdrawing from the Trans-Pacific Partnership (TPP) trade agreement, and reached a boiling point when President Trump imposed tariffs on aluminum and steel. Now with Harley-Davidson signaling its plans to create a new business plan for the 21st century, the Trump Administration is increasing the pressure for Harley-Davidson to maintain the status quo.
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.
Episode 81 of the Two Enthusiasts Podcast is out, and it is a marathon show – right at 2.5 hours in length. Because of that duration, we cover a huge range of topics, the first of which is a little news about Harley-Davidson, and the growing American trade war.
Jensen’s travels then took him to Milan, where he visited Pirelli’s world headquarters and testing facility, which was a unique experience in seeing how tires are evaluated and produced.
Lastly came a trip south to Sicily, to visit the Metzeler/Pirelli R&D testing facility, where Jensen rode the entire Metzeler tire range up a volcano…no seriously.
Back home in the USA, Quentin was doing a bit of racing, as he lined up on the grid in OMRAA’s 250 Ninja Cup. He then played on the other side of the wrench in his travels to Pikes Peak, spinning wrenches for Michael Woolaway, who raced a custom Ducati Hypermotard up the Colorado mountain.
At the same time, Jensen was in Laguna Seca for the World Superbike weekend, and the following Pirelli track day. There, Jensen got to ride two very unique motorcycles: the Kramer HKR EVO2 and the BMW HP4 Race. A short review: they did not suck.
Since Quentin recently also got a chance to ride the Kramer, the two trade notes on the show about this interesting single-cylinder motorcycle, and how much fun it is to ride smaller-displacement motorcycles on the track.
Like we said, it’s a marathon show, but we think you will find all the topics not only interesting, but the stories entertaining.
You can listen to the show via the embedded SoundCloud player, after the jump, or you can find the show on iTunes (please leave a review) or this RSS feed. Be sure to follow us on Facebook and Twitter as well.
We hope you will join the conversation, and leave us some audio comments at our new email address: firstname.lastname@example.org.
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.
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. Specifically, the European Union is imposing the 31% tariff (there was already a 6% tariff on motorcycles from the USA) to the goods that fall under HS code 87114000 & 87115000 on the Harmonized Commodity Description and Coding System.
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.
The annual AIMExpo is a pretty big deal for the American motorcycle industry, it being the de facto consumer and industry trade show for motorcycling, and all. This year’s event might get some extra attention though, as Vice President Mike Pence is slated to deliver the keynote address at the trade show. According to DealerNews, the Vice President has the event on his schedule, and has told his aides to “make it happen”. Of course, a lot can happen between now and September, when it comes to the schedule of the person who is just a heartbeat away from the presidency. Surely the Vice President’s presence at the trade show is designed to reinforce the commitment from the Trump administration to America’s manufacturing industries, and to talk about the state of the US economy.
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.”
The motorcycle industry is still deep in the throes of trying to prevent the United States Trade Representative (USTR) from taxing small-displacement motorcycles from Europe with a 100% tariff.
The proposed tariff would double the cost of any two-wheeled vehicle manufactured in Europe, with displacements between 51cc and 500cc , but the real kicker is that the proposed tariff isn’t really about motorcycles…it’s about beef.
For roughly 30 years now, the United States (one of the largest producers of beef) has been trying to gain access to the European market, but the EU bans beef that has been grown with hormones, because of health concerns (the ban also has the nice side-effect of protecting European beef growers).
To put pressure on the European Union, the beef industry (through lobbying the USTR) has proposed a number of retaliatory tariffs on European imports in the USA, motorcycles being one of them. Welcome to International Trade 101.
However, a major breakthrough happened last week, one that could affect this bovine standoff, and it has to with Chinese chicken.
An Asphalt & Rubber reader sent me link recently, outlining how President Trump’s pullout from the Trans-Pacific Partnership (TPP) would adversely affect international sales for Harley-Davidson.
At first I was just going to post a quick synopsis and send you all to read it for yourselves, if you wanted to dive deeper into the meat of the story. But then, I did some digging of my own.
The story, done by Forbes, doesn’t connect the dots too well. And while I agree with the author’s ultimate point, the reasoning he uses to get there is fairly flawed.
His argument boils down to the fact that the TPP would lower import costs for brands doing business in Asia, and since Harley-Davidson sells 40% of its bikes in the Asian market, it would therefore benefit from the USA becoming a TPP signatory.
The issue of course isn’t as cut-and-dry, and requires a bit of digging into what markets would become more favorable for Harley-Davidson, and where the future of the Bar & Shield brand resides. Buckle-up, because here we go.