Description of the Tariff
In September of 1982, Harley-Davidson petitioned the U.S. International Trade Commission (ITC) for relief from the importation of heavyweight motorcycles and power-train subassemblies (an engine part). The petition was filed under Section 201 of the Trade Act of 1974, known as the "Escape Clause," which allows an industry to request import relief from foreign competition when increasing imports are causing or threatening serious injury to the domestic industry. In these cases, the ITC investigates the claim and then reports to the president. If the finding is affirmative, the executive branch examines the matter and the president makes a decision within 60 days.
After its hearing on November 30, 1982, the ITC found that Harley-Davidson made up 75 percent of the American motorcycle industry (as measured in terms of capital and labor). The rest of the industry is composed of one Honda plant and one Kawasaki plant. On January 19, 1983, the ITC concluded by a vote of two to one that imports of heavyweight cycles, but not power-train subassemblies, posed a substantial threat to the American motorcycle industry.[14]
To provide relief, the ITC recommended the following five-year tariff plan for heavyweight motorcycles:
Raise the current tariff of 4.4 percent to 49.4 percent and keep it there for a year; lower the rate to 39.4 percent in the second year, to 24.4 percent in the third year, to 19.4 percent in the fourth year, and to 14.4 percent in the fifth year. After the fifth year the tariff is to return to 4.4 percent.
On April 1, 1983, President Reagan adopted the ITC recommendation, with minor alterations. Appended were provisions to lessen the impact of the federal relief on small foreign suppliers. The order allows 5,000 West German motorcycles each year to come in without duty increases, with the allowance rising to 6,000 in the second year, 7,000 in the third year, 8,500 in the fourth year, and 10,000 in the fifth year. It also allows 4,000 units from Britain and Italy to come in at the old rate (increasing by 1,000 units annually for five years). Japan is to be permitted to send 6,000 units (increasing by 1,000 units annually) to the United States at the old duty. In 1982, 80 percent of the imported heavyweight motorcycles were Japanese. With the provisions that were added to the ITC plan, the tariff affects trade with the Japanese companies almost exclusively.
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Originally Posted by rfranks303
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