protective tariffs, motorcycles and the beef lobby

In April 1983, President Ronald Reagan ordered a rise in tariffs – taxes on imported or exported goods – on “heavyweight” motorcycles from 4.4 percent to 49.4 percent. If you ever wondered why the 1980s were littered with Japanese motorcycles that topped out at 699cc, now you know why. The tariffs kicked in at 700cc because half of all Japanese motorcycles imported into the US displaced 750cc. This rise in tariffs was based on the 1974 Trade Act, which gave the government broad authority to do exactly this kind of thing to help American companies.

“We’re delighted,” said Vaughn Beals, Harley-Davidson’s chairman at the time. He couched that statement by claiming The Motor Company would improve their manufacturing processes and practices, but we all know that didn’t happen until the introduction of the 80-horsepower Fathead (officially the Twin Cam 88) engine in 1999. The 15-year focus on the 1340cc Evolution engine, released in 1984, ushered out the venerable 1200cc Shovelhead power plants that HD had been relying on since the mid-1960s. The Fathead vibrated so viciously that HD revised it (but not until the 2000 model year), adding counterbalance shafts in an attempt to mollify long-complaining riders.

In other words, Harley had 20 years, give or take, to improve their product, but refused to even make a half-hearted attempt do so until Japanese motorcycles started seriously threatening their market share on America’s highways.

I digress, however, and I do not want you to think this article is out to bash Harley-Davidson. They had 50% of motorcycle registrations in the USA in 2015 for a reason. It is important to note that in 1983, they had only been out from under the disastrous, destructive leadership of AMF for about two years and were struggling for survival. Harley-Davidson is a legitimate American icon, and nothing I say can take that hard-earned status away from them.

Instead, let’s jump back and look at those tariffs. In 1983, the import duty (another word for tax) jumped from 4.4 percent to 49.4 percent. This affected about 20 percent of the over one million motorcycles imported into the USA, and about 80 percent of the motorcycles affected were manufactured in Japan. According to President Reagan’s five-year plan, the tariffs would gradually reduce from 49.4 percent in the first year to 14.4 percent in the fifth, after which they would return to 4.4 percent.

The law carved out an exception for a growing number of motorcycles manufactured in West Germany – our beloved BMWs. By the end of the program, 10,000 German motorcycles would be exempt from the import duties. British and Italian motorcycles (Triumph and Ducati) were also granted a number of exemptions, with up to 9,000 bikes allowed imported at the old 4.4 percent rate by the end of the program.

The justification for these tariffs was twofold. First, the US International Trade Commission determined that imported Japanese motorcycles were hurting Harley-Davidson. Second, Harley testified before the USITC that they planned to start manufacturing motorcycles in the 750cc segment, what today we call a “midweight” motorcycle.

Harley’s 1986 Sportster came in at 883cc, well above the 750cc mark. The only 750cc motorcycle Harley built in the 1980s was the XR750, a well-known flat-track racing bike, which also saw action in other styles of racing. When HD finally made a street version of the XR750 in 1983, they put out a Sportster with a 1000cc engine based on the XR750 design. The bike sold so poorly they made it for just two years, ending its production well before the protective tariff law’s five-year plan expired.

Harley brought back the XR in 2008, with the XR1200, but discontinued that bike after the 2012 model year due to poor sales. (It’s too bad, too, because I rode an XR1200 and it was a fantastic motorcycle.)

The “motorcycle wars” of the 1980s spurred the Big Four – Honda, Kawasaki, Suzuki and Yamaha – to innovate. They couldn’t rely on big profits from large-displacement bikes such as Honda’s CBX – a 1047cc six-cylinder behemoth – so they simply stopped making it and many other similar bikes, focusing instead of smaller displacement motorcycles that weren’t affected by the giant tax increase.

In the end, Harley was still making motorcycles, and the Japanese companies were still importing huge numbers of bikes into the US. Nobody really won the motorcycle wars, but nobody really lost, either, except for maybe motorcycle riders who loved big-bore Japanese bikes.

Looking back, we can understand why this all happened.  Harley was hurting after a recession. Their technology was stuck in the previous generation. At the same time, the Japanese and European motorcycle manufacturers were leaping forward as fast as they could – remember, BMW introduced the first ABS-equipped motorcycle (the K 100) in 1988 – and their economies weren’t as hindered by the 1981-82 recession as the USA’s was.  It made sense for Harley to go to the government to ask for help, and the help they got in the form of protective tariffs made sense in the grand economic scheme, even if it ultimately did not show Harley-Davidson a huge amount of benefit.

Which brings us to today. As you may know, Europe’s economy is in a weird holding pattern and right on the verge of chaos. The turmoil comes from a set of poorly performing countries (PIIGS – Portugal, Italy, Ireland, Greece and Spain) and the impending exit of Britain from the EU. There are motorcycles made in those countries, but other than Italy, none of them sport a first-line street bike manufacturer.

It may come as a surprise to you to learn that, once again, it seems as if protective tariffs may come to imported motorcycles. This time, however, the target is exclusively European motorcycles. The government institution involved is not the International Trade Commission, but the United States Trade Representative. The reason for the hoped-for protective tariffs is not a flailing Harley-Davidson, but rather the beef industry.

Wait, what?

Since 1981, the European Union has banned the importation of any meat from any animal raised with synthetic hormone treatments; it was a gradual ban that took full effect in 1989. You may have heard of BGH – bovine growth hormone – and substances like that are exactly what they’re keeping out of their food supply. Europe has a troubled history with beef in the 20th century, largely due to several outbreaks of bovine spongiform encephalopathy, more commonly known as “mad cow disease.” Britain suffered the continent’s worst outbreak of the deadly disease, with millions of cattle slaughtered between 1986 and 1998 to prevent the spread of the disease. While BSE’s causes lie in cows consuming the remains of other cows and not the treatment of cattle with hormones (natural or synthetic), the fact remains that Europe is wary of beef, period, and imported beef is granted a high level of scrutiny.

When the EU’s ban on US beef went into full effect in 1989, the US responded by putting 100% tariffs on a variety of European food products.  Like the 1980s tariffs on imported Japanese motorcycles to protect Harley-Davidson, these tariffs on food make sense. They were a simple tit-for-tat measure to hit back against the EU’s meat ban.

What doesn’t make sense is that the USTR is now considering imposing tariffs on sub-500cc European motorcycles imported into the US over an argument about beef. After losing an appeal to the World Trade Organization, the “beef lobby” seems to think a 100% tariff on all sorts of scooters and dirt bikes as well as street bikes like the KTM RC 390 and BMW G 310 R will force the EU to rethink its ban on hormone-treated meat. This is the third time the beef lobby has tried to get these tariffs imposed; previous attempts in 1999 and 2008 failed.

When it comes to BMW, the proposed tariff is, at best, symbolic. BMW sold 13,730 motorcycles in the USA in 2016 and not a single one of them was under 500cc. BMW announced its first sub-500cc motorcycle since the R 51/3 in 1956 last year, the single-cylinder G 310 R and its sister, the G 310 GS. The 310 R isn’t even expected to make it to dealerships until the third quarter; a 100% tax on it would obviously double its $4,995 price tag and destroy any sales potential the motorcycle has.

The American Motorcycle Association has naturally spoken out against this measure, but it is incumbent upon all American motorcyclists to act when our sport is threatened unreasonably. I am all for protecting American companies when they need the help, but it is unfair to punish European motorcycle manufacturers for the EU’s meat importation policies. The AMA says the 2008 attempt to get these tariffs in place received about 600 thumbs-down comments. If that was all it took to defeat the measure, imagine what we could generate in these politically charged times.

There are three ways you can make your voice heard on this matter:

  1. Point your web browser to the USTR’s website and leave a comment about this measure on the appropriate page, which is https://www.regulations.gov/comment?D=USTR-2016-0025-0001. You must do this no later than 30 January 2017.
  2. Attend the public hearing on this issue. The hearing starts at 9.30 in the morning on Wednesday, 15 February 2017 in Rooms 1 and 2 of the US Civil Service Commission building, located at 1724 F Street NW, Washington DC 20508. This building is also known as the US Trade Representative Annex and it is on the Department of the Interior’s National Register of Historic Places. If you attend the hearing, plan ahead and allow plenty of time for the D.C. area’s notoriously terrible traffic. 1724 F St NW is just a few blocks from the White House. Parking is limited. Farragut West is the nearest Metro station.
  3. Contact your federal senator and/or representative in the US Congress and express your opinion on this matter and ask them to get involved. If you don’t know who your senator or representative is, head over to the website whoismyrepresentative.com and plug in your ZIP code.
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