In Defense of Tariffs

Got your attention, didn’t I? If you’re reading this, you’re most likely already on board with the fact that trade tariffs and quotas and really anything that disrupts free trade (insert here plethora of known sea-monsters to be roaming the oceans) are not only a bad idea, but often produce the opposite outcome they intended to achieve.

1986 Honda Magna VF700

One that I find particularly amusing is when in the early 80s the US Government found it in the public’s best interest to have Harley-Davidson motorcycles be more successful than their foreign counter-parts. Foreign bikes, particularly from Japan, have long out-sold, out-performed, and out-lasted Harleys. It got bad enough that in 1983 the Federal Government gave Harley a leg-up by slapping massive tariff hikes on any foreign-built bikes bigger than 700cc. Honda at the time had a fairly successful engine in the VF750 that powered the Magna, Sabre, and Interceptor, and was going to get hit hard by the new law.

So what do you think happened? Harley grabbed up all the fancy new market share? Foreign manufacturers found it no longer profitable to export motorcycles to the U.S.? Nope. Honda reduced the engine size in 1984 to 698cc, right under the tariff limit. Thus was born the VF700, a far superior engine that still out-does the behemoth engines Harley makes even today, and the rest is history. So thank you, government intervention, for unleashing the innovativeness of those like Honda while stifling Harley’s own ingenuity even more.

Not really your intention though, huh?

Advertisements
This entry was posted in Policy and tagged . Bookmark the permalink.