Harley-Davidson Is Riding Into Another Tariff Storm. Can Its Turnaround Hold?
Harley-Davidson sells one of America’s most recognizable industrial symbols, which makes the company an easy target in trade disputes. Factory locations and national identity can matter as much as motorcycle sales when governments want leverage.
Canada imposed a 50% duty on large motorcycles this month. The US responded by banning large motorcycle imports from Canada beginning Sept. 29.
Why retaliation keeps landing here
Harley-Davidson has absorbed retaliatory tariffs rather than raise sticker prices. That choice has cost it more than $170M over eight years.
The European Union applied 25% tariffs in 2018 and threatened another round in 2025. Canada's 25% duty last year stayed in place six months and cost Harley $8M.
"The economics are a distant second to the politics."
Scott Lincicome, Cato Institute
Canada accounted for 4% of Harley's $4.5B in revenue last year. Raymond James analyst Joe Altobello called the standoff manageable, saying Canada is a relatively small portion of the business.
The damage spreads beyond one nameplate. Quebec-based BRP saw two Can-Am three-wheelers hit, while Indian Motorcycle and Buell have been caught as collateral.
Cheap bikes, expensive credit
Chief executive Artie Starrs, who took over in October, is cutting prices and preparing a lower-priced model called the Sprint. The goal is volume first, profit later through parts and accessories.
Bond raters flinched. S&P Global Ratings cut Harley to junk status in July, dropping unsecured debt one notch to BB+, the highest junk tier. S&P estimates adjusted margins near 5% to 6% in 2026, with several years needed to approach 10%.
Moody's still rates the company one notch higher, and Fitch two steps higher. Long-term net debt stood at ~$1.63B as of March 31.
What the last quarter showed
Second-quarter shipments of 39.2K units rose 9.4% year over year but missed projections for 40,810. Revenue of $1.2B fell short of the $1.3B analysts wanted.
Adjusted earnings of 75 cents per share beat the 67-cent estimate. Management raised full-year motorcycle unit income guidance to between $10M and $50M, up from a range spanning a $40M loss to a $10M profit.
Global retail sales rose 1%, led by a 3% gain in North America. Europe and the Middle East declined sharply, and Asia was flat. Loop Capital moved to buy from hold, with analyst Brandon Rolle writing that cheaper models let younger riders access the bikes.
Reading the valuation window
Wall Street Zen raised Harley from sell to hold on Sept. 19. The consensus target of $27.44 sits barely above the market price.
Citigroup kept a neutral rating but lifted its target to $31.00 from $27.00 on Sept. 8. The stock trades at a price to earnings ratio of 15.80 with a dividend yield of 2.91%.
Brand licensing offers a separate read on demand. Shinsegae International, which holds the Harley-Davidson Collections license in South Korea, reported apparel sales up 124.9% through Sept. 15 versus a year earlier.
The apparel machine keeps running in the US too, with a returning Realtree collaboration covering jackets, hoodies, hats, and gloves.
Canadian dealers are watching existing inventory clear. Thunder Bay Harley-Davidson co-owner Mandie Ciotucha doubts customers will accept prices once the tariff is added.
Harley could supply Canada from Thailand because the tariff excludes goods originating outside the US. That option and Canada’s small revenue contribution should keep the dispute focused on margins.
