Beyond tariffs
Looked at in domestic political terms, it is not difficult to understand why the Reagan administration recently slapped stiff extra duties on Japanese-made heavy motorcycles. The entire US heavy-motorcycle industry (big bikes, as opposed to smaller, lightweight mopeds) is now down to one lone firm, Harley-Davidson. Japanese imports, however, continue to pour into the US. By imposing a tariff of 49.4 percent on all imports beyond the first 6,000 motorcycles - which will still be subject to the current 4.4 percent tariff - the White House hopes to salvage what is left of the American industry and its 2 ,500 jobs.
This tough action may well be justified on a one-time basis, given the fragility of the US motorcycle industry. To its credit, the White House has said that it may lift the duties if circumstances permit. The danger in going the stiff-duty route, however, is that it not only might prompt retaliatory action by Japan (or other nations) but could be used as a precedent by other equally hard-pressed US industries seeking special tariff relief. Indeed, given the fact that two Japanese motorcycle makers already have plants in the US - Honda and Kawasaki - and will thus not be subject to the duties, it might have been far better for the White House to have refrained from imposing the duties. The administration apparently did so as a way of prodding Japan to guarantee $20 million in commercial bank loans to Harley-Davidson. But since the question of such loan backing has been in the discussion stage for some time now, the administration could well have applied pressure on Japan through normal trade negotiations, rather than imposing new duties.
Now that some nations are working their way out of recession, the last thing the world needs is a new round of tariff hikes that can only inhibit trade. The US faces the possibility of a trade deficit of $60 billion or more for 1983, in part because of the high value of the dollar, which makes American exports costly relative to exports from other nations. So the US needs to press nations to lowerm tariffs and other restrictions on trade, not raise them.
