Our industry is currently facing multiple motorcycle trade wars and the threat of several tariffs that could negatively impact business on two wheels—so many that it is hard to keep track. But we caught up with those on the front lines of the fight to pinpoint exactly what is happening on the motorcycle trade wars, what is being done about it and what you can do to help.
What’s Is Going On?
There are currently three major tariff issues taking place, and organizations such as the Motorcycle Industry Council (MIC) and the AMA are taking action in these arenas, along with industry leaders from multiple manufacturers.
- Bikes for Beef
You may remember hearing about this a few years ago, but the “Bikes for Beef” issue is not dead yet. In part of a long-running dispute between the United States and the EU over Europe’s refusal of American beef, the U.S. Trade Representative proposed a retaliatory tariff that included a 100% tax on EU-built motorcycles that are 50-250cc. The odd inclusion, that seems squarely aimed at KTM AG, has been vehemently opposed by the AMA, MIC and manufacturers, as well as motorcyclists who sent thousands of letters to Congress. While this motorcycle trade wars issue is not completely dead yet, it seems we are close to a formal resolution on that front. Let this serve as a reminder that our efforts can and DO affect change!
- China Tariffs
The trade war with China got started last year with a 10% tariff, which President Trump then threatened to increase to 25% at the beginning of 2019. But trade talks and negotiations went well and the increase was postponed. That was until a tweet came from Donald Trump last weekend (Sunday, May 5) announcing the tariffs would increase to 25% on Friday, May 10. The tariffs were put into the Federal Register on Wednesday, May 8, making the proposal a formal one, and as of midnight last night (Friday, May 10), the China tariffs were increased to 25%. This blanket tariff doesn’t single out motorcycles or parts, but comprises a major chunk of the motorcycle trade wars that will affect the two-wheel industry.
It is on this front that Polaris CEO Scott Wine recently elected to speak out. In a May 8 interview with the Minneapolis/St. Paul Business Journal, Wine emphasized that raising tariffs on Chinese products would be “downright catastrophic in terms of impact on the company and employees.” Read the full story. https://www.bizjournals.com/twincities/news/2019/05/08/polaris-ceo-trumps-threatened-tariff-hike-would-be.html?fbclid=IwAR2UOGVKnhunjdpioH-DdvxramhwrqxRc6QJfn_TaeVRL–NzPENlz4URSk
- EU Tariffs
This third, rather convoluted, issue stems from a 14-year-old dispute over aircraft manufacturer subsidies. It’s a Boeing versus Airbus, U.S. versus EU issue that somehow resulted in 500-700cc European-built motorcycles as well as motorcycle parts and accessories getting thrown into the mix. These segments are now facing up to 100% tariffs, which could be devastating to more than just KTM/Husqvarna, that currently has nine bikes in the 500-700cc segment. But the parts and accessories will have a far greater impact that will extend to nearly every motorcycle manufacturer.
“People look at that and think, ‘Oh, that’s not a big deal,’” said MIC’s SVP for Government Relations Scott Schloegel. “It’s a huge deal! Anyone needing replacement parts or looking to buy aftermarket products from EU countries will face significantly increased prices. In addition, OEMs in the U.S. will pay more for EU parts and components that are part of their motorcycles, ATVs and ROVs (side x sides). The whole powersports industry will suffer.”
Everything from new bike sales to old bike repairs will potentially be affected by this, as will aftermarket purchases such as Michelin tires, Akrapovic exhaust, Brembo brakes, etc.
The EU is now retaliating with its own list of products that will be taxed, which includes assorted motorcycle parts and accessories such as gear boxes, clutches, exhaust pipes and silencers.
The self-stated intention by the Trump Administration is to force an answer on the World Trade Organization’s ruling on aircraft subsidies. As the U.S. Trade Representative’s Robert Lighthizer said in the April 8 announcement, “Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”
All three tariff issues propose a significant challenge to the motorcycle industry, with the China and EU tariffs currently at the forefront. The situations continue to escalate and no one seems to know when/how it will end. But the motorcycle industry has members who have been active in D.C. finding ways to help protect our community. With regard to the EU tariff topic, MIC and AMA members, along with industry leaders and manufacturer representatives, will testify before the U.S. Trade Commission on Wednesday, May 15 and make a case as to why motorcycles, parts and accessories should be kept off the list.
“Hopefully we can get them exempted out at the hearing on Wednesday after we make our case there,” Schloegel explained. “If for some reason we are not successful in that, we will fight for an exclusion process. So that would be the next step if we’re not successful on Wednesday with making our case.”
The MIC has already been successful in the exception process on the China tariff front, successfully getting helmets removed from the original list that was put in place last year. It is due to effective lobbying and letter writing that we are able to make gains in these fights, which the MIC and AMA continue to head.
Motorcycle Trade Wars: What Can We Do?
In the case of legislative issues, we are pretty good at sounding off to our elected officials. But in the case of unilateral executive action, and proposals from the U.S. Trade Representative, who do we appeal to? How can we make our voices heard in the current motorcycle trade wars?
- Write Letters to Congress
Writing letters to your representatives can still be effective in this situation.
“If you reach out to your members of Congress, they can weigh in with the White House and with USTR Ambassador Robert Lighthizer to let them know we don’t want these tariffs to be put in place,” explained Schloegel.
Find My House Rep http://www.house.gov/representatives/find/
Find My Senate Rep http://www.senate.gov/general/contact_information/senators_cfm.cfm
- Submit Comments Directly to the USTR
A more direct course of action includes submitting comments directly to the USTR, as the matter is currently open for a comment period. The USTR specifically asks “whether increased duties on particular products might have an adverse effect upon U.S. stakeholders, including small businesses and consumers.” That extends to just about all of us who intend to purchase any European-made parts and accessories, and most of all dealers, shops, mechanics, vendors, importers, distributors, etc.
In an April 30 outreach, KTM invited vendors to submit comments to the USTR at the following link. (Scroll all the way down for a letter template suggested by KTM) Click on Comment Now, and please keep in mind that these letters are public, so be careful not to include any business confidential information.
Submit Comments to USTR https://www.regulations.gov/document?D=USTR-2019-0003-0001
(Scroll all the way down for letter template)
- Submit Comments Directly to MIC
On May 8, the MIC issued a press release: “Urgent! We need Your Help Fighting Tariffs!” The MIC Government Relations Office is requesting letters that they may bring with them in the Wednesday, May 15 testimony in D.C. The MIC is calling upon everyone in the powersports industry to send letters opposing these “unnecessary added costs that could cripple our industry.”
“Tariffs are taxes,” stated Schloegel in a firm reminder to motorcyclists. “Tariffs are taxes that are put on by our government. They are not paid by the EU or by China. Those taxes are paid by American companies and consumers when the goods come in to the United States.
“We agree that the playing field for a lot of industries is not level. That’s unfortunate and does need to be addressed. We support the administration’s efforts to try to address that. What we don’t agree with is putting taxes on motorcycles, parts and supplies that are ultimately passed along to the consumers. It really is the companies companies and consumers here in the United States who get stuck with the bill.”
The MIC asks that letters be written to the USTR on company letterhead if possible, and emailed as a PDF to email@example.com by this Sunday, May 12. The comment period extends to May 28, but letters received by May 12 may used to support the MIC’s case to the U.S. Trade Representative on May 15 when members testify before the agency.
USTR Letter Template
Please copy/paste the letter template below and fill in your personal information in order to submit a comment to the United States Trade Representative: Visit https://www.regulations.gov/document?D=USTR-2019-0003-0001 and click on ‘Comment Now.’
Section 301 Committee
Office of the U.S. Trade Representative
600 17th Street, NW
Washington, DC 20508
RE: Request for Public Comments: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute (Docket No. USTR-2019-0003) 8711.40.30 Motorcycles (incl. mopeds) and cycles, fitted w/recip. internal-combustion piston engine w/capacity o/500 cc but n/o 700 cc; 8714.10.00 Pts. & access. for motorcycles (including mopeds)
To the Members of the Section 301 Committee:
We strongly oppose the imposition of retaliatory tariffs on motorcycles and motorcycle parts and accessories imported from the European Union under tariff categories 8711.40.30 and 8714.10.00. Tariffs on these products threaten not only these imports, but pose great risk to the U.S. domestic motorcycle community more broadly.
[Insert specific language of impacts on sales, industry, U.S. jobs, U.S. operations]
We therefore urge that motorcycles and motorcycle parts and accessories (8711.40.30 and 8714.10.00) not be included in any revised list of products subject to retaliatory duties in connection with the large civil aircraft dispute. Any such tariffs pose significant downstream risks to U.S. companies like ours that rely on a strong and vibrant U.S. domestic motorcycle community.