Reagan used tariffs, not tweets, to protect Harley-Davidson from foreign competition

Thirty-five years ago, President Ronald Reagan took bold steps to protect a storied U.S. manufacturing company from foreign competitors. 

In 1983, Reagan ordered massive tariffs on large Japanese motorcycles to help the last surviving maker of American-made motorcycles:

Harley-Davidson Motor Co. of Milwaukee. 

“The president’s courageous action demonstrates his support for the concept that free trade must also be fair trade,” a delighted Vaughn H. Beals, Harley’s chairman, said at a downtown news conference after Reagan's action.

Harley-Davidson is now on the other side of a tariff tangle.

Today it finds itself on the receiving end of a barrage of furious tweets from President Donald Trump, angry at the company’s decision to move some production overseas.

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Harley officials say they are moving production of bikes destined for the growing European Union market to the company's international factories to avoid 31 percent tariffs — a response by the EU to import duties imposed by the U.S. on steel and aluminum made in Europe and other countries.

Harley is opening a plant in Thailand this year and has assembly plants in India and Brazil. 

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In 1983, the company was reeling from an onslaught of Japanese motorcycles cruising down American roadways.

Reagan’s action was considered unusual for an administration committed to free trade, according to articles at the time from The Milwaukee Journal.  

Harley had spent months pressing Washington for help, saying it lost money in 1981 and 1982, the first losses in the company’s 80-year history. Harley laid off 1,600 workers — 40 percent of its workforce — in 1982.

In 1981, an investor group led by Beals bought the company from AMF. That move, and the government protections, were seen as key factors in a legendary turnaround for the motorcycle manufacturer. 

Reagan ordered a tenfold increase in tariffs on heavyweight motorcycles, almost all of which were then imported from Japan. In the first year of a five-year program, tariffs rose from 4.4 percent to 49.4 percent on all large highway motorcycles. The duties were then scaled back in successive years to 39.4 percent,  24.4 percent, 19.4 percent and 14.4 percent. 

The president’s decision was based on recommendations of the U.S. International Trade Commission, which concluded Harley — which had dominated the post World War II large motorcycle market — had been harmed by Japanese imports. 

“We’re delighted,” Beals said at the time. “It will give us time that we might otherwise not have had to make manufacturing improvements and bring out new products.” 

The action angered Japan.

“We consider it unfortunate that the American side decided to take this kind of drastic measure,” the Japanese embassy in Washington said.

By 1987, the company asked the Reagan administration to withdraw the protections. 

'We're profitable again,” Beals said. “We're recapitalized. We're diversified. We don't need any more help.”

Rick Barrett of the Journal Sentinel staff contributed to this report.