As a quick economics refresher, here's how tariffs work.
A company imports either a product or part of a product from a country that isn't where they're based. They cost, let's say, $20 before tariffs. The company then sells that product for $30 to the consumer, netting themselves a small profit.
But if the country the company resides in imposes tariffs on those goods from the country it imports it from, say, 50%, that good then costs the company $30 to import. To make a profit, that company then will have to sell that good to you for $40, passing on that cost to the consumer.
The idea of a tariff isn't to make the country the company imports that good or part from pay, but to make the company look within the country it resides in to make the same good or part so they don't have to pay the tariffs. But again, if you can't or the price of the same good within your home country costs just as much as the one with the tariff imposed, those additional costs are passed along to the consumer, not to the country of the part or good the company imports it from.
Worse yet, tariffs aren't good for global business as a whole, either, as retaliation is absolutely something countries engage in. So when they're imposed, countries tend to impose other tariffs on the goods, services, or parts of the country that originally imposed their own tariffs, i.e. America imposes a tariff on all imported goods, the United Kingdom imposes tariffs on imported American goods.
As is the current threat from the U.K. on American goods, including and singling out, Harley-Davidson. Something the country has done before.
According to Politico, this isn't the first time it's imposed tariffs on American goods. The country did this the last time Trump was president on American steel. "The U.K. has retaliatory tariffs on iconic U.S. goods including Harley Davidson motorbikes ready to be immediately deployed in case of a trade war with Donald Trump," states the paper, adding, "The British government has been wargaming how to respond to potential Trump tariffs on U.K. goods, with officials briefing ministers that they can repurpose former EU measures against the U.S. without any need for further investigation. The U.K. carried over tariffs from the European Union after Brexit that were placed on U.S. goods during Trump’s first term as retaliation to the then-president’s sweeping tariffs on European steel."
This comes at a truly terrible point in Harley-Davidson's long, storied history. As domestic demand has absolutely fallen off a cliff, the Motor Co. has pushed harder and harder to saturate the European and Asian markets, with the U.K. being a major player. It's done more to reach out to potential customers within the area, as well as even apparently attempt to lure in MotoGP fans with its visceral King of the Baggers series, though I'm suspect that these in-roads will work.
But all of that will be for naught if Harleys, which are already some of the most expensive motorcycles on the market, suddenly and overnight get 10% to 30% more expensive because of counter-tariffs imposed by the U.K. and potentially counter-tariffs made by the EU. Imagine a $30,000 motorcycle becoming a $50,000 motorcycle once these counter-tariffs go into effect, which could literally happen overnight.
"Current and former government officials told Politico that the U.K. can immediately place these tariffs back on the U.S. if Trump delivers on his threat to hit all overseas imports with 10 to 20 percent tariffs without triggering pushback from Britain's trade watchdog," states the outlet, adding, "This can be done without the usual need for an investigation by the independent Trade Remedies Authority, because the tariffs were indefinitely suspended by the British government in 2022 rather than being unwound entirely."
If you don't think they will, Harley felt these tariff repercussions during the last Trump presidency, too. And this is just from the U.K. and the EU. If Asian countries impose their own counter-tariffs on American goods, specifically Harley-Davidson, the company is absolutely screwed.
Harley is on the precipice of failure, with dwindling demand, aging out customers, and a lineup that screams Boomer, the latter of which just aren't purchasing motorcycles anymore. Its best bet for securing long-term financial stability is to get into those markets where small-displacement motorcycles are king. But if even its awesome little 350 or 440 motorcycles become 10% to 30% more expensive, it'll be immediately priced out of the markets for things like CFMoto, Bajaj, QJ Motors, or any number of other cheaper domestically produced brands.
Add in the other macroeconomic factors the entire industry has been feeling as of late—high interest rates, stagnant wages, increased inventory, economic turmoil, and lower-than-believed demand—and you've got Harley-Davidson up a creek, without a paddle, a gushing leak, and a full-grown momma grizzly bear bearing down on it.
In other words, if these tariffs go into effect, and other countries impose counter-tariffs—which they most definitely will—Harley-Davidson is screwed.
