Ya learn something new every day

So back when I debated that Keynesian cat, the estimable Harry Layman showed up to provide moral support… and grab me a badly needed Sapphire & tonic before rebuttals. Since protectionism had come up, Harry asked me afterwards about one instance of successful protectionism — the tariffs on Japanese motorbikes which allowed Harley Davidson to come back from a moribund state in the 80s. I didn’t know anything about it, and said something like: “Well, I guess there will be cases like that, but you can never know which they’ll be in advance, and the harms outweigh the success stories.”

It turns out, though, that even that (apparently famous) example isn’t really a success story after all. As economist Doug Irwin explained in an April forum at Cato, the tariffs had nothing to do with Harley’s recovery.

Y’see, Harley makes “heavyweight” bikes. And the Yamaha/Kawasaki/etc. heavyweight bikes were all manufactured here, because there’s not really a market for them in Japan. So those couldn’t be hit with the tariff. So the government did the next best thing, which was to slap a massive tax on middleweight imports, defined as bikes with a piston something-or-other range the bottom end of which was 700ccs. So the Japanese companies tweaked their bikes, which had been at the low end of the range to start with, and started shipping them with exactly 699ccs. In other words, the tariff ended up not making a difference. Harley would’ve recovered either way. Go figure.