Monday, May 14, 2012


Great bikes of the past: Honda's Nighthawk S was a middle finger to mid-'80s import tariffs

Back in 1982, things weren't going so well for our friends at Harley-Davidson. In fact, the entire company was on the verge of folding. For a variety of economic and social reasons, the domestic motorcycle market was soft and not many Americans were rushing out to buy new bikes.

This situation created several highly undesirable factors for everyone involved. The Japanese manufacturers found themselves with a huge stockpile of bikes in the US that their dealers weren't selling, which naturally drove prices down. The resultant price drops caused a general panic within the hallowed halls of H-D, which was already struggling to survive as it was. Faced with the likely tanking of its brand, Harley-Davidson came up with a plan: petition the Reagan Administration for huge tariffs to be imposed upon some imported motorcycles.

Now then, in this modern age of obscenely huge corporate bailouts and massive, market-debilitating government, such an idea doesn't seem so far-fetched. But in its day, H-D's petition for tariffs as a self-protection mechanism was bold as love. The kicker is, Harley-Davidson succeeded wildly. Partly as a result of the post-Carter-Recession political climate of the day, legislation for a five-year tariff period quickly became law. With the stroke of a pen, a new precedent had been set; one that economists are still studying today.

According to a 1987 article in the Chicago Tribune, "The International Trade Commission and the administration approved stiffer tariffs because Japanese manufacturers had shipped more than a two-year inventory of big motorcycles into a declining U.S. market, threatening Harley's survival. In the first year, tariffs on ... 'heavyweight' motorcycles rose tenfold, to 49.4 percent. Each year the level dropped, until the tariffs reached 15 percent over the last year."

'Heavyweight' being the key word. The tariffs only applied to motorcycles with an engine displacement larger than 700cc. This meant that to keep the sport motorcycle segment affordable, high-performance but small-displacement engines would need to be developed. Enter (among other tariff models of its day) the Honda CB700SC Nighthawk S.

Believe it or not, there was a day when a new high-performance Japanese sportbike wasn't too expensive. Japanese motorcycles were once the "affordable" choice for riders who wanted good-looking, reasonably priced, bulletproof bikes. With an MSRP of $3,299, which is about 6,400 bucks in 2012 dollars (try buying any brand new mid-sized motorcycle for that price), excellent handling for a bike of its day, and a willing 82-horsepower, 700cc inline four in its frame, the stylish Nighthawk S was an instant and resounding hit. The CB700SC was literally fawned over by the moto-mags of the day, many of whom used gushing verbosity and terms like "hot rod" to describe it.

Japan steamed over the tariffs, calling them "unfortunate" and "drastic", but ultimately came out on top. In the end the entire scheme backfired, arguably making Japanese motorcycles an even better product in the market than they'd already been, and setting the stage for them to grab even more market share over the next ten years.

In 1984, the Cato institute called out the tariff plan for the political boondoggle it was, writing:
"President Reagan may have feared that rejecting the ... proposal for motorcycle protection would play into the hands of those who wanted changes in the trade laws. It would fuel their argument that the present law gives the president too much discretionary authority. This concern, no doubt, was one rationale for his decision.
"Another reason for the president's decision was that if the relief had not been adopted, Harley-Davidson might have gone under immediately, with unfortunate consequences for the president's reelection chances. If Reagan had refused relief and Harley-Davidson had folded immediately, many would have seen the president's decision as the cause of Harley's demise. Reagan's difficulties with blue-collar workers, especially in the industrial Northeast, where Harley-Davidson has plants, might have been exacerbated.
"Harley does not employ many people, so Reagan's primary concern was not about losing the support of those who would have lost their jobs, but about losing the support of the many who identify Harley-Davidson as a great American company."
As an important side note to the politics of the situation, it's important to also point out that the tariffs may have actually cost up to several thousand American jobs over the five years they were in place, almost as many jobs as Harley-Davidson had employees at the time.

Still, thirty years later, consider the legacy bikes like the Nighthawk S have created. Thanks to the innovations begun in the tariff years, we now ride in an era of compact, ultra-light motorcycles that can turn a buck fifty on 599 cc's or less. This philosophy joined with racing technology in a kind of symbiosis that peaked with bikes like the GSXR superbikes, which dominated American racing for the better part of a decade, during which the likes of Harley-Davidson left competition altogether.

In closing, I feel compelled to emphasize that this article isn't about bashing H-D. In fact, I love Harley-Davidson, admire their bikes, and wish them unprecedented successes, both now and in the future. This article is about the consequences of government manipulation of markets, which are almost always unintended, though rarely unexpected by the likes of critical-thinking people. In the case of H-D's mid-'80s tariffs, the results were a mixed bag; a bag from which some fantastic, small-displacement bikes emerged –– the Nighthawk S definitely being one of them.