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Trade War II

January 14, 2017
Vespa GTS 300

How does $13,398 U.S. for a GTS sound? (Piaggio Group ohoto)

Surely you’ve heard President-elect Donald Trump say he wants to slap YUGE tariffs on goods imported from China and Mexico. Well, there’s a distinct possibility of such a tariff being imposed on European motorcycles. And it’s much larger than what Mr. Trump proposes.

Since the 1960s, the U.S. has levied a 25% tariff on imported trucks weighing more than 1000 lbs (454 kg). Known as the Chicken Tax (because it was imposed in retaliation for European restrictions on imports of U.S. chicken), it caused Toyota, Nissan and other companies to manufacture light trucks in the U.S., or go through some serious gymnastics to get around (build, dismantle, reassemble once clear of customs).

This time, the dispute is with beef hormones.

And the solution proposed by the Office of the United States Trade Representative is to impose a tariff on European-manufactured motorcycles and scooters with engine displacements between 51 and 500cc. That tariff would be 100%. Or higher. Your $6,699 Vespa GTS becomes a $13,398 item, at the minimum.

The surgical precision of this is striking, but not at all surprising. The effect on the U.S. moto biz will be minor, but only because the U.S. moto biz is such a minuscule part of the economy.

The effect on Vespa and Piaggio in the U.S. would, at most, be an inconvenience.

Vespas sold in the U.S. and Canada are built in Italy. Everything with a Vespa badge in the U.S. is also built in… wait for it… Vietnam. Piaggio Group sells WAY more bikes in Southeast Asia than in the U.S., or even Europe. Their Vietnam factory is newer, bigger and able to produce far more than the one in Pontedera.

There is a belief that Americans wouldn’t accept a Vespa not made in Italy. Well, owners of Fiat 500s seem to think their built-in-Mexico, powered-by-an-engine-built-in-Michigan cars are Italian, even though the company that sells them is incorporated in the Netherlands. So I don’t think Piaggio Americas has anything to worry about.

Still, if this passes the effect on dealers could be devastating.

Luckily, there is something you can do. The American Motorcyclist Association has a handy form with which you can express your displeasure to the USTR.

You have until January 30, 2017 to make a comment. Spread the word, please.

  1. January 14, 2017 4:04 pm

    Well that explains one thing. My wife’s Fiat 500 has had an endless series of niggles, broken armrest, broken convertible roof mechanism, broken passenger seat folding handle (twice) failed headlight and so forth. My Thai built Triumph has been amazing. Thailand beats Mexico in my (limited) experience.

  2. January 15, 2017 8:48 am

    Well, maybe now that Victory is history Piaggio group could work a deal w/Polaris to use the idle production facility to build their sub-500 bikes & scoots…and maybe even export some of the US-built ones back to EU….(‘course, the Oriental mfrs may not be too enthused about that, but c’est la vie, no?)

  3. January 15, 2017 12:50 pm

    Doug, the only Piaggio Group bikes in the U.S. market potentially affected by this are Vespa and Piaggio scooters. And since annual volume on those is only about 40,000/year, the only way it would make any sense to set up production in the U.S. would be if Piaggio Americas were interested in significantly growing U.S. scooter sales… and they’ve made it abundantly clear they are not. In fact, it wouldn’t surprise me if they just throw in the towel if this comes to pass. Guzzis and Aprilias are way more profitable, anyway.

  4. January 16, 2017 1:09 pm

    There is NO chance Piaggio would stay in the US market if they choose to enact this tariff.

  5. January 16, 2017 2:46 pm

    Not with scooters, for sure. Aprilia and Moto Guzzi’s U.S. offerings would be unaffected.

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