Harley-Davidson profit plunges to $25M as tariff costs hit $45M in first quarter

Key facts

• Harley-Davidson first-quarter profit fell to $25 million from $133 million a year earlier.
• North American motorcycle sales rose 14% to 23,803 units.
• Global motorcycle shipments declined 3% to about 37,300 units.
• Tariff costs for the first quarter totaled $45 million.
• Licensing revenue doubled to roughly $6 million.
• LiveWire revenue increased to $5 million, with loss narrowing to $18 million.
• Global dealer inventories reduced 22% year-over-year.

Profit collapse amid tariff headwinds

a first-quarter profit of $25 million on May 5, a steep decline from $133 million in the same period of 2025. The 75% drop came as the company absorbed $45 million in tariff costs, which CFO Jonathan Root described as the largest quarterly impact expected this year. Root noted that the global tariff environment “continues to evolve,” with potential for increased tariff recoveries in future quarters. Despite the profit plunge, the Milwaukee-based manufacturer saw a 14% increase in North American retail motorcycle sales, reaching 23,803 units. Global retail sales grew 8%, though overall motorcycle shipments fell 3% to roughly 37,300 units, reflecting a deliberate strategy to align wholesale with retail demand.

‘Back to the Bricks’ strategy takes shape

Harley-Davidson unveiled a new strategic initiative called “Back to the Bricks,” aimed at reversing its financial fortunes. President and CEO Artie Starrs said the first-quarter results demonstrate that recent changes are gaining traction. “We're pleased with our first quarter results, which reflect actions we've taken to drive demand and improve dealer health,” Starrs stated. a 22% year-over-year reduction in global dealer inventories, a key metric under the new strategy. Starrs emphasized that the 14% retail growth in North America drove the 8% global increase, while inventory alignment remains a priority.

Licensing and LiveWire show mixed progress

Harley-Davidson’s licensing revenue doubled to approximately $6 million in the first quarter, up from $3 million a year earlier. The electric motorcycle subsidiary LiveWire generated $5 million in revenue, compared to $3 million in 2025, while its operating loss narrowed from $20 million to $18 million. The improvement in LiveWire’s loss, though still substantial, signals gradual progress in the company’s electric vehicle segment. The figures suggest that non-core revenue streams are beginning to contribute more meaningfully, even as the core motorcycle business faces margin pressure from tariffs and shifting global demand.

Tariff impact and global uncertainties

CFO Jonathan Root highlighted that the $45 million tariff hit in the first quarter is expected to be the largest of the year, but cautioned that the situation remains fluid. “There are a number of factors at play in this space including the potential for increased tariff recoveries,” Root said. The company did not provide specific guidance on how tariffs might affect the rest of 2026. The global trade environment has added a layer of complexity to Harley-Davidson’s turnaround efforts, particularly as it seeks to balance domestic production with international sales. The company’s reliance on North American retail growth underscores the importance of the U.S. market amid global uncertainties.

Outlook: balancing growth and cost discipline

Harley-Davidson’s first-quarter performance reveals a company navigating a delicate transition. While the profit decline is stark, the underlying retail sales growth and inventory reductions indicate that the ‘Back to the Bricks’ strategy may be stabilizing the core business. The doubling of licensing revenue and LiveWire’s narrowing losses offer additional bright spots. However, the $45 million tariff burden and ongoing global trade tensions pose significant risks. The company’s ability to sustain retail momentum while managing cost pressures will be critical in the coming quarters. Investors and analysts will be watching closely to see whether the early signs of recovery can translate into sustained profitability.

The bottom line

• Harley-Davidson’s first-quarter profit fell 75% to $25 million, largely due to $45 million in tariff costs.
• North American retail sales rose 14%, and global retail sales increased 8%, signaling demand resilience.
• The new ‘Back to the Bricks’ strategy focuses on aligning wholesale with retail, reducing dealer inventories by 22%.
• Licensing revenue doubled to $6 million, and LiveWire’s loss narrowed to $18 million.
• CFO Jonathan Root expects the first quarter to have the largest tariff impact, with potential recoveries ahead.
• The company faces a balancing act between sustaining growth and managing cost pressures from tariffs.