Why the USA Might Tax European Motorcycles Over Beef

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What do chickens have to do with potatoes? For that matter, what do chickens have to do with steel? And what do both of those things have to do with tires?

The answer isn’t as obvious as you may think, and this week everyone in the motorcycle industry is asking themselves what European motorcycles have to do with beef exports.

The answer to all these questions is the same though, and it involves the rather unsophisticated motorcycle industry being dragged into the rather complex world of international trade negotiation. Let me explain.

What’s the Beef?

You see for nearly 30 years now, the United States has been battling with the European Union over the prohibition of hormone-raised beef being sold on the European market.

The United States of America is one of the largest beef exporters in the world, but much of the beef we export has been raised on growth hormones of various kinds.

The EU has banned the use of many of these hormones, mainly for public health reasons, and that is the central issue of what is known as the Hormones case in legal circles.

Over the past three decades, the United States has tried to pressure the European Union into allowing the importation of its beef, and the US has used retaliatory tariffs to put pressure on the European Union.

Many of these tariffs have been on similar goods from the EU, namely food products (think olive oil from Italy, cheese from France, chocolate from Switzerland, etc). However, from time to time, the United States likes to include unrelated goods in its tariffs.

That is the case here, as there is a proposal from the Office of United States Trade Representative (USTR) that there should be a 100% tariff on small-displacement motorcycles from Europe.

Before I go further, readers should understand this tariff is a frowned upon, but common practice when it comes to international trade disputes. There really is nothing new going on here. 

This Isn’t Your Father’s Trade Dispute, Sorta

I’ve seen several leading voices in the motorcycle industry liken this trade dispute to the one that involved Harley-Davidson in the 1980s, where motorcycles from  Japan were taxed at nearly 50%. 

This couldn’t be further from the reality of what is going on here, and shows a very crude understanding of the situation. In the case of Harley-Davidson in the 1980s, the tariffs imposed on Japanese manufacturers were 100% for protectionist reasons. 

Harley-Davidson was the last remaining motorcycle company from the United States, and Japanese manufacturers (both inside and outside of the motorcycle industry) were being very aggressive in the US market.

In the case we have today, there is nothing protectionist about our tariff motives. The United States makes a lot beef; we want to sell our beef in Europe; and the Europeans don’t want our beef because it has growth hormones in it. 

We have had a tough time over the past 30 years changing the minds of the Europeans, so someone at the USTR thought up a new plan: lump in industries not related to food consumption, and the motorcycle industry was one of them.

Other items being lumped into this trade dispute are hair clippers with electric motors, yarn, glue, water, soup, chewing gum…and the list goes on and on.

So What’s Really Going on Here?

Unfortunately for the motorcycle industry, we are a bargaining chip in a much larger dispute. US beef exports are big business, with big lobbying efforts, and adding a market like the European Union to the list of places that eat American beef is easily something that is valued in the billions of dollars range.

That might seem unfair to many motorcyclists, but it is just a normal day in trade offices around the world. Negotiating trade deals, especially between large world powers, is an extremely complex game, with many pieces on the board. The tactics used mirror that situation.

This idea that it is “unfair” for the USA to impose tariffs on European motorcycle imports, simply because they have nothing to do with beef exports, is perhaps one the most  least sophisticated responses possible to the situation. That being said, it doesn’t mean that we have to like it.

For those interested in taking action, you will be happy to learn that the American Motorcyclist Association (AMA) is up in arms over this issue, and is urging its members to leave comment about the USTR proposal – demanding the removal of European motorcycles from the proposed tariffs list.

Source: AMA