U.S. And E.U. Leaders Reach Truce In Retaliatory Tariffs War

The current European and U.S. trade dispute dates back to 2004 when both parties accused one another of unfairly subsidizing aircraft giants Boeing and Airbus. In 2018, the World Trade Organization declared both sides guilty, allowing the U.S. to implement $7.5 billion in tariffs and the E.U. to retaliate with $4 billion in duties.

Over the years, the retributive approach on both sides extended the tariffs beyond the aircraft manufacturers. From French wine to American whiskey to Harley-Davidson motorcycles, the tax rates ballooned. In 2018, the dispute intensified into an all-out trade war when former President Donald Trump imposed new steel and aluminum tariffs on several NATO allies.

That decision spurred the E.U. to hit back with a series of tax hikes that would have levied a 56-percent tariff on American motorcycles over 500cc. Luckily, the E.U. relented, delaying the measures until December, 2021. However, that didn’t solve the impending trade crisis for brands like Harley-Davidson.

At the European Union-United States Summit in Brussels, Belgium, on June 15, 2021, U.S. President Joe Biden and European Commission President Ursula von der Leyen reached a truce in the 17-year Boeing-Airbus spat. The agreement will go into effect on July 11, 2021, and will suspend the tariffs for the next five years. The truce not only mends trans-Atlantic trade relations, but also lays the groundwork for both parties to unite against a common threat in the aircraft industry: China.

While the agreement is welcome news for American V-twin manufacturers, the summit didn’t directly solve the ongoing aluminum-steel trade dispute.

“We could have taken countermeasures on the steel and aluminum issue before this summit with Biden and we did not,” stated von der Leyen. “However, having suspended tariffs for six months, there is time to discuss and find a solution. The priority of this meeting was to find an agreement on Airbus-Boeing: it was not possible to resolve the other issue in a weekend.”

Relations among the E.U. and U.S. may be improving but Harley-Davidson isn’t out of the woods just yet. However, both parties are hopeful that a new aluminum-steel trade agreement will be reached by year’s end. Similar to the aircraft industry, China is a major threat due to its overproduction of steel and aluminum. We wouldn’t be surprised if the E.U. and the U.S. band together against the common enemy, but the Motor Company will have to wait a little longer before taking a sigh of relief.