Your next KTM or Vespa could soon get a lot more expensive. And it’s all because Europeans don’t want to buy American beef from cattle raised on growth hormones. Makes sense, right? Welcome to the world of international trade disputes.
The U.S. is threatening retaliate for market barriers for U.S. beef by hiking import duties on a whole host of food products from Europe, including hams, sausages, Roquefort cheese and lingonberry jams. And, oh yeah, motorcycles and scooters with engine displacements below 500cc.
If that sounds similar to the more than 50-year-old Chicken Tax that slapped a 25 percent import duty on trucks and vans, it’s because it is. That duty came about over a dispute with Europe over U.S. poultry exports, and has essentially deprived American drivers from being able to buy foreign-made pickups.
The proposal to increase the duties on European goods in the long simmering beef dispute was brought by the U.S. Trade Representative’s office last month, basically in the final weeks of former President Barack Obama’s administration. That echoes what happened in the final months of George W. Bush’s time in office, when similar tariffs were proposed, but ultimately put off amid an uproar on either side of the Atlantic.
The American Motorcyclist Association isn’t amused by the latest move.
“There is no logical link between motorcycles and beef,” says Wayne Allard, the AMA’s chief lobbyist. “It is absurd to even consider such a move.”
The U.S. Trade Representative’s office says it’s still taking suggestions on how high the duty should be, but the AMA warns it could be 100 percent or more.
Paying double the price on Italian mineral water might be something you’re willing to do when a bottle costs a buck. Shelling out $4,000 for an otherwise $2,000 Piaggio scooter would most likely cause you to go with what non-European manufacturers have to offer.
The manufacturers (not to mention dealers and consumers) affected by the hike would include Aprilla, Beta. BMW, Ducati, Fantic, Gas Gas, Husqvarna, KTM, Montesa, Piaggio, Scorpa, Sherco, TM and Vespa.
The elephant in the room here is KTM. Through the first 11 months of 2016, nearly $150 million worth of sub-500cc motorcycles were imported to the U.S. from Austria (where KTM is the only major manufacturer). That’s just behind the $165 million worth of all Japanese-made motorcycles in the category, per U.S. International Trade Commission data.
Other European countries aren’t huge players in the smaller displacement category, with Italy accounting for about $17 million in U.S. imports, Spain’s $3.5 million, France’s $1 million and Germany’s $517,000.
So what would happen if the higher tariffs go through? Look to Thailand and China, which are already the third and fourth biggest manufacturers of smaller bikes for the U.S. market, with $90 million and $49 million in imports respectively. Manufacturers like KTM and Ducati, which already make bikes in Thailand, could choose to boost production there, while other European manufacturers could seek to expand outside the EU to bypass the U.S. tariffs.
BMW is building its new G 310 R in India, which has a lot to do with the German company keeping the price below $5,000 in the U.S. Producing the bike outside BMW’s big Berlin plant would also end up saving big on import duties to the U.S.
Hopes of finally eliminating the Chicken Tax on pickups and vans might have been squashed by President Donald Trump’s decision Monday to withdraw from the Trans-Pacific Partnership agreement that took aim at the duty. And Trump has also been a proponent of higher tariffs on imported vehicles.
The AMA is hoping that motorcycle imports don’t fall into the same category, and is urging opponents of the to submit comments to trade officials calling for the proposal to be dropped.
The clock is ticking, though. Monday is deadline to submit your comments.
Erik Schelzig is a Nashville-based journalist who has been trying to sneak his motorcycle on to assignments for two decades. But mostly he just uses the bike to commute to work.