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Donald Trump has issued a warning regarding reciprocal tariffs, which would result in the US imposing the same tariff rates as those levied by other countries on American exports.

Flashback: Donald Trump Comments on Harley-Davidson’s Struggles in the Indian Market due to Trade Tariffs — Harley-Davidson currently partners with Hero MotoCorp in India, with the X 440 being their first collaboratively designed model.

US President Donald Trump has advocated for reciprocal tariffs on countries, corresponding to the rates at which they impose tariffs on American goods. During discussions with Prime Minister Narendra Modi, Trump criticized India’s high tariffs on US-manufactured Harley-Davidson motorcycles.

Also Read: Discover Harley-Davidson bikes in India

In his second term, Trump has reiterated the notion of reciprocal tariffs, asserting that this aligns with his vision of equitable trade practices. He previously imposed a 25% tariff on specific imports from Canada and Mexico, though that initiative was temporarily paused until the end of February. He has also targeted regions like the European Union, China, and India. “Currently, we are a reciprocal nation… Whatever tariffs India charges us, we will reciprocate, and I believe this is only fair,” he stated. “I recall when Harley Davidson struggled to sell their motorcycles in India due to steep taxes and tariffs, which led them to establish local manufacturing to circumvent these costs. Others might consider similar strategies in their dealings with us.”

While both India and the US maintain significant trade relations, Trump’s tariff threats do not single out any specific country. By promoting domestic production and leveraging his presidential campaign on the promise of creating more American jobs, Trump signals his desire for production capacities to develop or increase in the United States rather than relying heavily on imports.

What happened to Harley-Davidson in India?

Harley-Davidson entered India in 2009, launching its first dealership in 2010. Known as a premium brand in the US, Harley initially imported models such as Sportster, Dyna, VRSC, Softail, and CVO. However, as the years went by, the company began to locally assemble certain models, including the Street 500 and 750 in Bawal, Haryana.

Despite the vast two-wheeler market in India, penetrating the premium segment posed significant challenges. In September 2020, Harley-Davidson announced its exit, citing weak demand and disappointing sales figures. However, it wasn’t a complete exit; the American company partnered with Hero MotoCorp in October 2020, designing a framework for Hero to enable sales and servicing of Harley’s motorcycles. By 2023, their first joint project, the Harley-Davidson X440, launched at a price of ₹2.30 lakh (ex-showroom).

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First Published Date: 14 Feb 2025, 12:50 PM IST

Here’s a brief overview of how tariffs operate in economics.

When a company imports a good or its component from a foreign country, let’s imagine it costs $20 prior to any tariffs. The company markets that item for $30 to consumers, achieving a modest profit.

However, if the country where the company is located imposes a 50% tariff on imports from the supplier country, the cost of that good rises to $30. To maintain profitability, the company is then compelled to charge consumers $40, thus transferring the added expense onto them.

The primary intention behind tariffs is not to penalize the exporting country but to encourage domestic production, prompting companies to source locally to avoid tariff costs. Nevertheless, if local alternatives are either unavailable or similarly priced, the burden of extra costs still falls on consumers, rather than the country from which the product was imported.

Moreover, tariffs can lead to adverse effects on global commerce, instigating countries to retaliate. For instance, if the U.S. imposes tariffs on imported goods, the UK may respond by imposing tariffs on American products, including notable brands like Harley-Davidson.

As reported by Politico, this is not the first instance of the U.K. imposing tariffs on American products. The last time this occurred was during Trump’s presidency concerning 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,” the publication notes, adding, “The British government has been strategizing how to counter potential Trump tariffs on U.K. goods, with officials briefing ministers that they can reinstate former EU measures against the U.S. without further inquiry. Following Brexit, the U.K. maintained tariffs that the EU had imposed on U.S. products as a response to Trump’s steel tariffs.”

This situation arises at a particularly difficult time in Harley-Davidson’s prolonged history. With domestic demand plummeting, the company has been intensifying efforts to penetrate European and Asian markets, with the U.K. emerging as a key market. They’ve worked diligently to engage potential customers in the area and have even sought to attract MotoGP fans through its dynamic King of the Baggers series, though it’s uncertain if these efforts will succeed.

However, all these initiatives could be rendered ineffective if Harley-Davidson bikes, already among the priciest motorcycles on the market, increase in price by 10% to 30% because of retaliatory tariffs from the UK and possibly from the EU. Picture a $30,000 motorcycle suddenly escalating to $50,000 due to these newly enforced tariffs, a situation that could unfold almost overnight.

Photo by: Harley-Davidson

Harley EICMA Announcement

“Current and former government officials told Politico that the U.K. can swiftly reintroduce these tariffs on the U.S. if Trump acts on his threats to impose 10 to 20 percent tariffs on all imports, without facing opposition from Britain’s trade regulators,” the article notes, adding, “This can proceed without the typical need for an investigation by the independent Trade Remedies Authority, as these tariffs were suspended indefinitely by the British government in 2022 rather than being fully removed.”

If you’re skeptical, Harley experienced the negative consequences of tariffs during Trump’s last presidency as well. And this issue extends beyond just the U.K. and the EU; if Asian nations decide to impose their own counter-tariffs on American goods, particularly Harley-Davidson products, the impact could be detrimental.

With plummeting demand, an aging customer base, and a lineup that seems targeted at Baby Boomers—who are no longer purchasing motorcycles at the same rates—Harley is teetering on the brink of failure. Its best strategy for attaining long-term financial health lies in penetrating markets where small-displacement bikes are prevalent. But if even their desirable small-displacement 350 and 440 motorcycles become 10% to 30% more expensive, the company may lose its competitive edge against manufacturers like CFMoto, Bajaj, QJ Motors, and other reasonably priced domestic brands.

When you factor in additional macroeconomic challenges currently affecting the entire industry—such as high interest rates, stagnant wages, increasing inventory, economic instability, and lower-than-expected demand—Harley-Davidson finds itself in a precarious position, facing a multitude of challenges.

In summary, if these tariffs take effect and other nations retaliate—which they almost certainly will—Harley-Davidson may be facing serious trouble.