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Harley-Davidson Had A Very Different Reaction To Tariff 35 Years Ago: ‘We’re Delighted!’

Virginia Kruta Associate Editor
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Motorcycle giant Harley-Davidson is facing backlash over a recent decision to move some of their production overseas to avoid EU tariffs on motorcycles coming from the United States — but just 35 years ago, the company took a very different view of a tariff so massive it was referred to as “draconian.”

(RELATED: Trump Calls Out Harley-Davidson For Moving Production Overseas Due To Tariffs)

Designed to protect Harley-Davidson from a market flooded by Japanese-made motorcycles, then President Ronald Reagan increased the tariff on “large highway motorcycles with an engine displacement of more than 700 cubic inches” from 4.4 percent to 49.4 percent in 1983.

Vaughn L. Beals, who was then the chairman at Harley-Davidson, responded to the action by saying, “We’re delighted. It will give us time that we might otherwise not have had to make manufacturing improvements and bring out new products.”

Japan initially threatened to file “unfair trade” charges. Hiroshi Ota, counselor for public affairs at the Japanese embassy, said, “We consider it unfortunate that the American side decided to take this kind of drastic measure.”

Ultimately, Japan worked around the tariff and began building motorcycles with smaller engines in much greater numbers.

In 1987, Beals requested an end to the tariff. He explained, “We’re profitable again. We’re recapitalized. We’re diversified. We don’t need any more help.” The Reagan administration responded by lifting the tariff.

The overall lesson, according to I. M. Destler, who studied trade issues at the Institute for International Economics in Washington, was simple: “It will strengthen those who argue that temporary protectionism can lead to successful adjustment.”