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Where’s the beef (tariff)?

May 16, 2017
2015 Vespa GTS 300 Super

Vespa GTS 300 Super (Photo: Piaggio Group)

U.S. Senate confirmation of Robert Lighthizer as U.S. Trade Representative means a decision on whether to apply a proposed 100% tariff on 51- to 500cc motorcycles imported from Europe will likely be made soon.

One more time, scooters and motorcycles have nothing to do with beef, and vice versa. But that’s not the point. The point is to take some kind of retaliatory action. The bikes are part of a long list of EU items that could also be subject to U.S. tariffs. In fact, The Office of the U.S. Trade Representative stated publicly that motorcycles were included because officials there hoped the outrage of motorcyclists would give the U.S. leverage in negotiating this issue.

Piaggio Group would be the most profoundly affected, since a significant portion of their U.S. sales are Vespa and Piaggio scooters. (Piaggio Group also sells Aprilia and Moto Guzzi motorcycles in the U.S. that would not be affected by this action.)

Upon learning of Mr. Lighthizer’s confirmation, American Motorcyclist Association president Rob Dingman sent a letter to the USTR, which you can read here.

Once again, the AMA has made it easy for you to make your feelings known to Mr. Lighthizer: Go to this page, fill out the form, and click the button. While you’re at it, a note to your electeds in the House and Senate wouldn’t hurt… your Representative can be found at House.gov, your Senators at Senate.gov.

Worst case, if the tariff is adopted it won’t go into effect overnight. There will be a period of time to allow appeals and, well, lawsuits.

What will happen to Vespa owners?

If you already own a Vespa, nothing. Most of the parts of modern Vespas are made in China, and in any case the tariff would only be levied on finished bikes.

According to their preliminary 1st-quarter 2017 financial statement, in that time Piaggio Group sold 2500 bikes in North America. That’s a tiny fraction of what they sell in Europe and Asia. In 2016 Piaggio’s North American bike sales totaled about 25000. Again, not a lot.

Piaggio Group would seem to have three options:

• Exit the U.S. market. They really don’t seem to be all that interested, anyway. There’s still lots of room for growth in India, Southeast Asia, and South America. The U.S. is a mature market that will most likely see declining sales as the population ages.

• Source the bikes elsewhere. Piaggio has large, modern factories in Vietnam and India that are newer than the mothership in Pontedera. Remember, the tariff would only apply to bikes built in Europe. Nobody seemed to mind that the Genuine Stella came from India, after all. Owners of Fiat 500s seem to think their cars are Italian, even though they’re built in Mexico and powered by engines built in Michigan. The ones sold in Europe are made in Poland.

• Just go with it. Since Vespas have been positioned as luxury goods, the more I think about it, the more I think this could actually work. The rich are different from you and me. In their rarefied air, not charging enough hurts more than charging too much. Upscale consumers who’d hesitate to pay $6,500 for a Vespa GTS would unhesitatingly hand over 13 grand if it came with exclusivity. See sales figures, above.

We shall see. More on this story as it develops.

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