The price of manufacturing domestic Harley-Davidson bikes is set to increase on the heels of President Donald Trump’s steel tariffs, but the impact on financing will likely be minimal, analysts told Powersports Finance.
Last week, Trump formally imposed a 25% tax on imported steel that will take place within 15 days of enactment. Powersports and automotive OEMs are preparing for increased costs. A Wedbush Securities report estimates the tariffs could cost Harley-Davidson $30 million annually.
“Tariffs do have the potential of increasing the cost of producing cars in the U.S., so you could see a shift in production overseas,” said Michael Vogan, auto economist and associate director at Moody’s Analytics. “I don’t know what the causal chain to the finance industry would be, but it’s something the industry as a whole has their eye on.”
Harley-Davidson is still “evaluating our options for managing these anticipated cost increases,” according to a company statement.
The increased price of steel could prompt lower vehicle production, thereby lessening incentives because OEMs would have less volume to push, Vogan said. However, auto manufacturers have already been decreasing production due to high off-lease returns, he noted, and Harley-Davidson began lowering volume due to low demand.
Harley-Davidson shuttered a factory in Kansas City earlier this year amid lagging sales. Additionally, European countries signaled they would raise their own tariffs on American goods such as Harley-Davidson bikes.
“We believe a punitive, retaliatory tariff on Harley-Davidson motorcycles in other major markets would have a significant impact on our sales, our dealers, our suppliers, and our customers in those markets,” Harley-Davidson said in a statement.
Harley is “most optimistic” about sales growth in international markets, Wedbush analyst James Hardiman said in the report, adding that a trade war “certainly isn’t going to help that.”
This article originally appeared in the monthly Powersports Finance Update newsletter. To view previous issues, click here.