understanding tariffs and how they work

Tariffs have been big news lately, part of the news cycle that overhypes everything Trump-related for the glory of clicks and views. It’s a little crazy, and it’s a bit hard to understand everything related to tariffs, so I’m here to give you a little basic info.

A tariff is a tax, that’s the bottom line. Tariffs are levied by governments, which is why they are a type of tax, and they are levied specifically on goods of one sort or another.  Traditionally, tariffs are levied on imported goods, that is, items made outside the United States and brought into the country to be sold to Americans for fun and profit.  Another word for a tariff is a duty; while the two words have slightly different connotations when it comes to imported goods, we use them as equivalents for each other. I’ll be using tariff throughout this post.

(You can read another post I wrote about tariffs, “protective tariffs, motorcycles and the beef lobby.”)

The first tariff in US history came from the Tariff Act of 1789, and indeed it was the first law of any sort passed by the new government established by the US Constitution (also created in 1789).  The new US government needed to not just boost, but create an economy that would sustain its efforts, and they still (to a certain extent) held a grudge against England.  It’s no joke that England was an economic powerhouse in the late 18th century – the British Empire legit ruled most of the world at that point.  However, the new US government found itself needing to promote business and manufacturing at home, so that’s where the impetus for the Tariff Act of 1789 came from.

The US and UK signed a treaty in 1783 that ended the American Revolution; one of the aspects of that treaty allowed the British unfettered navigation of the Mississippi River.  This greatly benefitted the British, but did not benefit the Americans much.  The British pushed the favor by passing the Navigation Acts (in 1783), which forced non-British ships – especially American ones – to pay heavy duties (i.e. taxes) when they offloaded their goods in British ports.  The Brits followed this law up with two others that further restricted American goods getting into British hands, so the Tariff Act of 1789 was in part a retaliation against this sequence of laws enacted by the British Parliament.

The Tariff Act of 1789 required foreign ships offloading goods in US ports to pay 50 cents per ton, while US-registered ships paid just 6 cents per ton.

Here’s an easy way to understand the situation.  Let’s say you make sails, and you charge $5 for a ton of sails.  You can sell your sails in America for $6 a ton and do well.  If you make your sails in England, and ship them to the United States, your distributor/importer has to pay $6.50 for one ton of sails.  If you make sails in the US (and transport them via ship), your distributor has to pay $6.06 for their ton of sails.

boat-classic-clouds-173910There’s the kicker, then. If you, as the distributor, sell both US- and UK-made sails, you can sell them to retailers at the same price, $7 a ton.  If you do that, you make just 50 cents on the UK-made sails, while raking in 94 cents on the US-made sails.

Let’s take it a step further, though, because what retailer makes just 50 cents on something?  No, as the retailer, you’re going to sell your UK-made sails for $10 a ton. This ups your profit to $3.50 a ton, but you can justify that higher price because those sails are made in England, and of course everybody knows British ships are awesome and they have been ruling the oceans for decades, so UK-made sails command a premium for their real or perceived quality difference over US-made sails.  Raising the price of the imported sails enables you to absorb the cost of the tariff.  Get this, though – everybody knows there’s a 50 cents-per-ton tariff on UK-made sails, so you can charge $10.50 per ton and now you’re making $4 per ton in profit without anybody complaining, because they know that 50 cents is going to the government, which of course is protecting you and American business/industry.

Jump back and look at the US-made sails, though.  Sure, they’re slightly inferior quality to the premium UK-made sails, but ships gotta have sails, right?  Instead of selling them for $7 a ton, you can sell them for $8 a ton, which gives people the impression they’re still getting a deal over the UK-made sails, but now you’ve upped your profit to $1.94 per ton, and because of the $2 per ton price difference, you’re likely to sell more US-made sails than UK-made ones, which improves your overall bottom line.  You can even up the price to $8.50 a ton, which still keeps them $2/ton below the cost of the UK-made sails (profit now $2.44/ton). You can safely buy fewer tons of UK-made sails, knowing you’ll sell more US-made ones at the now artificially higher price.  Plus you can feel good for supporting US industry!

There’s some lessons in there to unpack.

  1.  Tariffs are taxes charged to import goods into a country.
  2.  Tariffs can be absorbed by the importer or passed on to the consumer.
  3.  Because tariffs artificially raise the price of imported goods, domestic goods can be priced high and still look like a bargain to the consumer.

Think about this, though: What distributor in their right mind is going to eat the cost of the tariff?  That’s not good business, especially if your margins are razor-thin, like they are for many goods.  We’re talking mere cents of profit, with businesses relying on volume to really make money.  Wouldn’t you, a smart business owner in a capitalist economy, pass the cost of the tariff straight on to your customer?  Yes, you would, because you need to maintain your margins for your business to succeed.  You were already selling your goods for as low a price as you could, so you can’t really absorb the cost of the tariff.  The importer passes it on to the distributor, the distributor passes it on to the retailer, the retailer passes it on to the consumer.

Thus, the most important lesson of all: THE CONSUMER PAYS THE TARIFF.

This is not unique to the United States.  European consumers pay their tariff costs, Chinese consumers pay their tariff costs, Indian consumers pay their tariff costs and so on, just like American consumers do.

You might be wondering who benefits from higher tariffs, or really from tariffs at all. The government levying the tax is who benefits.  They collect the tariff up front at the ports.  They collect taxes on the money made by the distributor, the wholesaler and the retailer.  They then collect a sales tax when the consumer buys the product.  The government benefits every step of the way from tariffs, and that, my friends, is the whole reason tariffs exist in the first place – no matter where you live, no matter what form of government you are under and no matter what types of goods you’re buying.

Remember that.

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the Richmond Times-Dispatch ends candidate endorsements … for now

Ending the endorsements of political candidates in every election cycle is an interesting move on the part of the Richmond Times-Dispatch. Their endorsements have never meant much to me – after all, they always endorsed the Republican, I hate the two-party system, so why would it matter?  (here’s the column by Tom Silvestri, president/publisher of the RTD)

In 2016 the RTD endorsed Gary Johnson, the Libertarian candidate for president. They didn’t do it for any high-minded ideals (pun intended!), but rather because they were never going to endorse Hillary Clinton and they couldn’t bear to endorse Donald Trump. They felt like they had to endorse somebody because that’s the way it had always been done.  They even said Johnson could be a viable candidate if only people would give him a chance – which they have refused to do for other Libertarian candidates in the last two years. Indeed, Libertarian candidates are consistently left out of debates and media coverage by outlets both major and minor, including the RTD.

What the Richmond Times-Dispatch should have done was endorse nobody, and explained why. Just because you CAN do something doesn’t mean you MUST do something.

Now, to another of Silvestri’s points, that they’re ending endorsements because it’s too difficult to explain the difference between the Editorial department and the News department in a newspaper, and to create an understanding that the News department can (and does) run opinion pieces that aren’t straight news.

I agree with Silvestri that this can be difficult, and one of the commenters even quipped that the Johnson endorsement caused him to cancel his subscription. There is clearly a disconnect between opinion and news is this country, with people – including many on Facebook and other social media outlets – conflating opinion with news.

When you can have pure opinion, news-based opinion, opinion-based news and straight news all in one publication, it can indeed be confusing to the casual reader. This is one of the greatest problems our society faces in the 21st century – we have become casual consumers of everything and as a result, we stubbornly refuse to put much thought into what we’re reading, watching or saying. Parroting the party line or screaming “fake news!” at every opportunity does nothing to further the discourse that drives our political system.

People forget that democracy, for better or worse, is less than 300 years old. It is still a fledgling system, and a difficult one to maintain at that. There will be ups and downs, highs and lows, bonuses and deficits, all to the benefit or detriment of much of the population.

Refusing to engage – as the RTD is saying it’s going to do in the future here – is abdicating one’s moral responsibility to the republic. That’s on us, the citizenship of the United States of America – every last one of us.

Frankly, doing something just because it’s always been done is the #1 stupidest reason to do something. If you’re not doing something because that’s what needs to be done, stop doing it. Traditions are worthless, because all they do is tie you to a past that may not be worth repeating or frankly, even remembering.

Ralph Waldo Emerson said, “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines. With consistency a great soul has simply nothing to do. He may as well concern himself with his shadow on the wall. Speak what you think now in hard words, and to-morrow speak what to-morrow thinks in hard words again, though it contradict every thing you said to-day.” The RTD’s Johnson endorsement in 2016 cause an identity crisis on many sides. Internally, I’m sure they struggled with it. Externally, the readership that had come to expect de rigueur endorsements of Republicans found themselves stunned at the change they saw before them, perhaps unable to process what had just happened.

Our society’s greatest problem right now is its utter inflexibility, the refusal of so many to even consider an alternate idea, opinion, practice or process. Think about it – if Copernicus had simply gone along, we’d have never accepted the idea that the Sun – and not the Earth – is the center of our solar system.

Finally, should newspapers even be printing opinion pieces at all?  Is it their job – their responsibility – to tell me how they think I should be voting?  Or is it their job to gather the facts, express them in a clear, concise fashion, and let me come up with my own reasons for voting for this candidate or that one.

One of the reasons so many people trash reporters and cry about this or that being “fake news” is because of the high opinion-to-fact ratio present in much of modern mainstream journalism. The difference between news and opinion has largely become obscured to the point of pointlessness. When opinion is mistaken for news, the result is what kids today refer to as “butthurt” – that is, a great sense of offense at the words being printed or spoken.  When news is mistaken for opinion, facts cease to matter and there is no viable path to Truth.

I wish I could solve this last problem with the snap of my fingers or the wave of a magic wand.  I know that is unrealistic, and especially so as long as some among us steadfastly refuse to acknowledge that their opinions are not fact and continue to refuse to regard the opinions of others as having any validity at all.

some things we need to work on

A particularly unpleasant exchange on Facebook prompted me to write this. Stay with me, I think it’s important.

Calling somebody a pussy needs to stop being a go-to insult aimed at emasculating somebody. As we all know, pussy is a slang term for vagina, and it’s used in context to indicate your impression that the object of your derision is somehow weak, feminine and unworthy of your respect.

In all seriousness, if you want to see the strength and power of a pussy, watch a child being born. You will have a new and heightened respect for how powerful a pussy is. In a problem birth, instead of failing, the pussy holds strong, and sometimes the skin around it will tear. That’s how strong the pussy is – it forces other aspects of the body to fail because it refuses to fail itself.

If you call me a pussy, then, I refuse to feel weak. I will feel powerful. I will feel strong. I will feel resilient. Birthing a child is something no man can do, and it is the single most powerful expression of humanity there is.

Serving in the military does not make you a better person than I am. Holding a commission doesn’t make you smarter than I am.  Enlisting doesn’t make you more patriotic than I am. Being willing to kill somebody our government has decided is our collective enemy doesn’t make you more willing to kill than I am – it just means you got paid to do it by the government.

Serving in the military does not automatically make you a hero, nor does it automatically engender respect. You must still serve honorably to be respected for your time in uniform. You must behave heroically to be a hero. There are actual heroes in this world who have never served a day in uniform, and there are those who gave their lives for their country. Every country has heroes, dead and alive, and it’s not stripes on their sleeves or insignia on their collars that made them such.

I was part of a military family for 17 of my first 18 years. I grew up on military bases all over the USA and Europe. I have seen heroes and I have seen goldbricks, and I tell you this – there are way more goldbricks than there are heroes in the military forces of any nation. I have met men and women who, under orders and compelled by our government, have rained death and destruction down upon their fellow humans. Some of them are heroes, most of them are not. Doing your job does not make you a hero.

Having a different opinion about national events and policies does not make you smarter, more valuable as a citizen or more important than I am. It also does not give you the moral high ground. Disagreeing with you does not make me a traitor, nor does disagreeing with me make you one.

Having an opinion is one thing. Defending it with hurtful words and threats is something else. It takes a lot to offend me, but once I reach that point, you better believe I’m going to say something about it.

time to change the name of lee-davis high school

It’s become trendy in the last couple of years to propose renaming schools that bear the names of Confederate figures of importance. I support this trend because it first and foremost allows those whose values have evolved since the 1860s and 1950s to put their stamp on their communities. In Hanover County, Virginia, people are starting to talk about renaming Lee-Davis High School, so let’s take a look at the school’s namesakes.

Robert_Edward_Lee_by_Julian_Vannerson

Photo of Robert E. Lee by Julian Vannerson.

Robert E. Lee was born in 1807 in Virginia, and he died in 1870 in Virginia. He lived in Virginia all of his life, except when he was off serving in the military. He served in the military forces of the United States from 1829 to 1861, and he served the Confederate government’s army from 1861 to 1865.

By the end of the US Civil War, he was the general in charge of the entire Confederate army, and resistance against the United States collapsed after he surrendered his command to US forces at Appomattox Courthouse in April, 1865. Due to what is widely attributed as a clerical error, his citizenship in the United States wasn’t restored during his lifetime. Congress restored his citizenship in 1975, backdating it 110 years.

Lee was a military officer of distinction, having excelled at the United States Military Academy (aka West Point) and served in the Mexican-American War in the 1840s. He opposed the construction of memorials to his fellow rebels following the Civil War and supported the reestablishment of the pre-Civil War nation. However, he opposed racial equality and publicly spoke out against voting rights for former slaves throughout the remainder of his life.

Jefferson-Davis-by-Mathew-Brady

Photo of Jefferson Davis by Mathew Brady.

Jefferson Davis was born in Kentucky in 1808, and he died in Louisiana in 1889. He lived in various places in the south, including a stint in Richmond, Virginia, when he was president of the ill-fated Confederate States of America (1861-65). He continued to live in Virginia until 1867, when he was released from prison. Following his time in prison, Davis lived in Quebec, not returning to the US until President Andrew Johnson issued him a pardon in 1868. He then moved to Tennessee, where he ran an insurance company. He lived on an estate (bequeathed to him by a wealthy widow) in Biloxi, Mississippi, during his final years.

Davis continued to espouse racist and divisive rhetoric to the end of his days, though he did so primarily in private. His several attempts to return to legislative service following his pardon and return to the US failed.

In 1958, Virginia was caught up in the torrent of the civil rights movement. The US Supreme Court’s 1954 Brown v. Board of Education decision led to the forced integration of public schools across the country. The response to this legal order by the governor of Virginia, Harry Byrd, was the establishment of Massive Resistance. Instead of obeying the Supreme Court, Byrd and his supporters in Virginia’s legislature effectively shut down as much of Virginia’s public education system as they could as a way to prevent Virginia’s black school-age children from receiving an education equal in quality – and with equal access – to that of their white contemporaries.

Also in 1958, Hanover County, Virginia, was nearly finished constructing a brand-new high school along US Highway 360. The high school was the newest in the county; located in the town of Mechanicsville, the residents were justifiably proud of its construction. They chose to call the new educational facility Lee-Davis High School. At the time, naming public schools after Confederate figures was common practice across the southern states as a way to push back against the growing tide of the civil rights movement, and anybody that opposed the name of the new school would have remained silent about it, possibly out of fear for their personal safety. The Lee-Davis Confederates became a centerpiece of Mechanicsville life, and the school’s mission “to prepare students for success” remains, for all intents and purposes, a clearly obtainable objective in the 21st century.

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(To be perfectly honest, I find the naming of schools after any person to be ridiculous. New York City has the right idea with its Public School Number system. There’s no reason Lee-Davis couldn’t have been called Mechanicsville High School when it was built, or even Hanover County High School Number 2, both of which would have been both descriptive and adequate.)

Two of Hanover County’s other high schools – Atlee HS (1991) and Hanover HS (2003) – have simple, descriptive names that denote their location rather than singling out any individual for the honor of a name plate. The county’s other high school that opened in 1959, Patrick Henry HS, came about by consolidating four small schools into one. PHHS is named after Hanover County’s most famous resident, the American Revolutionary War figure Patrick Henry – you know, the “give me liberty or give me death” guy. He was also Virginia’s first governor following the establishment of the United States of America. Henry was born in Hanover County – in Studley, as a matter of fact, which is about five miles from my house. He lived his whole life in the state and died in Virginia, and though he was a slave owner, he actively supported efforts to end the importation of slaves into the USA.

If you have to name a school after a person, Hanover County got it right when they named Patrick Henry High School. Henry was a prominent, positive figure in American history, one that – despite his status as a slave owner – we can all respect. He also is from the county of the school that bears his name. It’s as appropriate a name as can be found, although West Hanover County High School would have been perfectly acceptable.

It’s time to eliminate the names of Confederate figures from our public education facilities. It’s time to allow all students to have and show pride in their schools and their schools’ mascots. The idea of black students at Lee-Davis cheering on their schoolmates under the moniker of the Confederates disgusts me to no end. While I can see why Robert E. Lee’s name would be attached to a school in Virginia, there is no reason to put Jefferson Davis’ name on any public education building in the state for the simple fact that he’s not from here, he lived here only briefly, spent part of that time in prison, and the only reason his name was attached to the school in the first place was to reinforce the dominance of the white population of the state over its black population during a time of social upheaval.

Instead of continuing the support the legacy of those who fought to preserve slavery (Lee and Davis) and those who fought to preserve educational segregation (Byrd), it’s time to support the legacy of local kids and the hope for the future they hold in their young hands and minds.

Change the name of Lee-Davis High School to Mechanicsville High School and put the establishment of a new mascot to a public vote in the school’s district.

lies, damn lies and statistics

At this point, about one month into the Trump Administration, I’m kind of beyond caring how good or bad a job Donald Trump can or will do. I’m pissed, and I can’t hold it in any longer.

He’s a liar. A lying liar what lies. AND HE LIES ABOUT STUPID SHIT.

On 16 Feb 2017, Trump gave a press conference to announce his new nominee for Secretary of the Department of Labor. He had to do this because his first choice withdrew from consideration after he figured out there wasn’t enough support in committee to get him to a full Senate vote. This is politics, it happens. Not really that big a deal.

The press conference, however, went on… and on… AND ON for 77 minutes. The thing I find myself focusing on is the one massively, obviously disprovable lie he told – and has been telling for weeks.

First he said he won the biggest electoral margin since Reagan.

Wrong.

Then he said he won the biggest electoral margin of any Republican since Reagan.

WRONG.

Here’s the cold, hard facts on every election from Reagan’s first in 1980 through the one we just had in 2016.

  • 2016
    • Trump (R) – 304
    • HR Clinton (D) – 227
    • Ratio of Victory – 1.3:1
  • 2012
    • Obama (D) – 332
    • Romney (R) – 206
    • 1.6:1
  • 2008
    • Obama – 365
    • McCain – 173
    • 2.1:1
  • 2004
    • GW Bush – 286
    • Kerry – 251
    • 1.1:1
  • 2000
    • GW Bush – 271
    • Gore – 266
    • 1.018:1
  • 1996
    • WJ Clinton – 379
    • Dole – 159
    • 2.4:1
  • 1992
    • WJ Clinton – 370
    • GHW Bush – 168
    • 2.2:1
  • 1988
    • GHW Bush – 426
    • Dukakis – 111
    • 3.8:1
  • 1984
    • Reagan – 525
    • Mondale – 13
    • 40.4:1
  • 1980
    • Reagan – 489
    • Carter – 49
    • 10:1

There you have it folks – cold, hard, historical facts. Reagan’s narrowest margin of victory still saw him pull down 91% of the electoral votes. Trump’s win over Hillary Clinton doesn’t even crack the top 10 lowest margin-of-victory contests. Trump got 56.5% of the electoral votes, more than Kennedy (56.4%) but less than Truman (57%). Barack Obama won the closer of his two elections, in 2012, with 61.7% of the electoral votes.

The last Republican to win before Trump was George W. Bush, both of whose victories are in the lowest 10 margin-of-victory elections; the hotly contested 2000 election that was ultimately decided by the U.S. Supreme Court saw him win with 50.37% of the electoral votes. In his “big” victory in 2004, he got 53.16% of the electoral votes.

The list of presidents who won a higher percentage of electoral votes than Donald Trump reads like a who’s-who list of presidents you never heard of: Van Buren, Garfield, Harrison, Buchanan, McKinley, Polk, Taft, Grant, Harding, Coolidge, Hoover and Pierce.

Quick – can you name one thing – ONE THING – that William Henry Harrison did in office other than die less than 31 days into his presidency? No, you can’t! AND HE WON 79.6% OF THE ELECTORAL VOTES!!

Donald Trump won a higher percentage of the electoral votes than precisely five presidents in the last 100 years: George W. Bush (twice), John F. Kennedy, Richard Nixon (1st election), Jimmy Carter and Woodrow Wilson. That’s it. Literally every other president since the 1916 election has won with a higher percentage electoral votes than Trump.

Just so you know, other than George Washington – who got 100% of the electoral votes both times he was elected – the only other presidents to come close to Ronald Reagan’s crushing defeat of Walter Mondale (525 to 13) were James Monroe (1792, 231 to 1), Franklin Roosevelt (1936, his 2nd election, 523 to 8), and Richard Nixon (1972, his 2nd election, 520 to 17). No other president won with a greater than 95% take in the Electoral College.

Every president since Reagan except for GW Bush got a higher percentage of electoral votes than Donald Trump did. There is no disputing these facts. I cannot help but wonder that if Trump is willing to lie about something so quickly and easily disprovable, what else is he willing to lie about?

 

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.

your next commerce secretary: wilbur ross, jr.

On 30 November 2016, President-Elect Donald Trump chose 79-year-old Wilbur Ross, Jr. to nominate for the post of Secretary of Commerce in his upcoming administration. Ross announced the selection himself during a CNBC interview that also featured Steven Mnuchin, Trump’s choice for Secretary of the Treasury. Both Ross and Mnuchin must be confirmed by the Senate before taking on their Cabinet positions.

Ross specializes in turning around failed corporations and seems to prefer those in energy and construction circles. Ross is reportedly worth $2.9 billion; Mnuchin’s net worth is estimated to be only about $40 million. Both men have worked many years for Wall Street firms and other financial institutions.

In Trump’s announcement confirming the selection, he called Ross a “champion of American manufacturing” and that Ross “knows that cutting taxes for working families, reducing burdensome government regulations and unleashing America’s energy resources will strengthen our economy at a time when our country needs to see significant growth.”

In 2004, Ross formed the International Coal Group in such a manner that the corporation was free from labor unions, health care plans for its employees or a pension plan. Through a series of subsidiaries, ICG owned Anker West Virginia Mining, which operated Sago Mine in Sago, West Virginia. On 2 January 2006, an explosion collapsed Sago Mine, trapping 13 miners. Only one of the miners survived. At the time it was the worst mining disaster in the US since 2001 and the worst in West Virginia since 1968. Another coal mine explosion in 2010 topped Sago’s death count with 29 fatalities.

In 2005, the Mine Safety and Health Administration (MSHA) cited Sago Mine with 208 violations, 96 of them classified as “serious and substantial.” Forty-six of the violations (18 S&S) came in the three months leading up to the explosion. The mine was closed following the explosion, but reopened on 12 March 2006. ICG later closed the mine permanently.

Though various state and federal agencies who investigated the explosion have released documents relating to the disaster, ICG has refused to release any records. A New York Post reporter, Roddy Boyd, claimed that Ross “knew all about [Sago Mine’s] safety problems,” but no proof of that knowledge has ever been released.

Ross served on the US-Russia Investment Fund during the Clinton administration and as New York City Mayor Rudy Giuliani’s privatization advisor. Ross was at one time an officer of the New York State Democratic Party. He has been married three times and has two daughters from his first marriage.

Photo of Ross courtesy of the Palm Beach Daily News (Creative Commons 4.0 license).