Harley-Davidson shares soared to their highest level in over three years on Monday after the European Union decided to suspend a planned increase in retaliatory tariffs on the company’s motorcycles as part of a partial trade truce with the United States.
The EU had threatened to double the tariffs on Harley motorcycles, American-made whiskey and powerboats to 50 percent on June 1 in retaliation for steel and aluminum tariffs imposed by former President Trump.
The European Commission, which oversees EU trade policy, said on Monday it would suspend the planned hike of retaliatory tariffs for up to six months.
Harley’s shares gained 8.5 percent on Monday to $51.73, their highest level since January
2018. By 3:30 p.m., the stock had receded slightly from the peak, to $51.65.
While the company welcomed the truce, it plans to continue legal challenges to an EU ruling that revoked a concession allowing it to ship bikes from facilities outside the US at a tariff rate of 6 percent.
“This is the first step in the right direction in a dispute not of our making,” said Chief Executive Jochen Zeitz. “Harley-Davidson employees, dealers, stakeholders and motorcycles have no place in this trade war.”
Harley’s bikes are now subjected to a 25 percent retaliatory tariff, increasing the overall duty on its bikes shipped to the European Union to 31 percent.
The Milwaukee-based company is betting heavily on Europe, its second-largest market after the US to help fuel its turnaround strategy. But higher tariffs would give its rivals including Triumph, Honda and Suzuki a massive pricing advantage.
The 118-year-old American brand had tried to escape the punitive measure by shifting the production of motorcycles for European markets to Thailand from the US – a move that prompted Trump to back a boycott of the motorcycle manufacturer.
However, the EU last month ruled that its bikes produced in Thailand would be treated as US-made.