In the 1980's, President Ronald Reagan slapped a 50% tariff on
Japanese motorcycle imports, sheltering Harley-Davidson from competition
for five years so they could become more productive and efficient.
Before the five years were up, Harley was exporting to Japan.
Today's free trade economists claim that trade promotes growth, but as
shown in the case of Harley-Davidson, growth promotes trade. As American
businesses are sheltered from unfair import competition, they become
more productive and efficient, and can offer their exports at a lower
cost to better compete with goods in foreign markets. If the response to
the unfair imports of Japanese motorcycles in the 1980's were left to
idealistic free traders, Harley would likely be a historical footnote
and America's trade deficit would be even larger than it is now.
The Harley-Davidson of today is not only wildly popular in the United
States, but there is also a huge following in Europe. As Euroland
ponders which American exports to use as examples of retaliation for
President Bush's 30% tariffs to protect the U.S. steel industry,
European citizens are lobbying hard to keep Harley-Davidson off the
The moral of the story is that if Reagan had listened to the free-trade
zealots and "let the market do it's magic," Harley-Davidson would have
been the feature in a disappearing act. But they prospered instead and
became an engine of export growth for America, creating literally
thousands of jobs.
The American parts industry got a boost from the import tariffs as well.
95% of the parts content in Harley-Davidson motorcycles is obtained from
domestic sources. In the automobile industry, only the Ford Taurus has a
domestic parts-content that high.
Today, Harley-Davidson stands strong and tall, symbolizing both American
patriotism and the American spirit in the belief that there is enormous
pride in owning a motorcycle that continues to be made only in America
by an American-owned company.