as bikeredii said, protectionism, on the long run, harm the market instead of protect it. It happened to the whole spanish industry, not only the motorcycle industry.
The fact is, either you like it or not, that Harley has been surpassed but almost any other bike manufacturer, including those with a late start such as Hyosung or the new Triumph. Don't tell me that at Harley they haven't had time to develop better engines. New Triumphs started just a couple decades ago and now have not only retro bikes, but sports bikes such as the Daytona or the Speed Triple.
HD chiefs were smart enough to understand that it was pointless to enter a war -bike performance- that they would never win. They needed to find its niche in the market, and they did it, marketing their bikes to those customers less price-driven, those who doesn't mind to pay an extra to wear D&G jeans instead of Levis. Less units sold but more profit.
Obviously, police forces are somewhat "forced" to buy american, after all they are using taxpayer's money. But the association of torque vs power as in Harley vs sportsbike is a phallacious one, there are plenty of modern, naked bikes, not inherently sporty, with plenty of torque and power at low revs and light enough to run circles around any harley. To many people, including me, bikes were a way to spend some disposable income. The bike you get just depends on how much disposable income you have and what kind of social life you have. After the thrill is gone, some people just move on to new whims, and some people -including me- gets hooked, or, more exactly, passionated about riding and wrenching in equal terms.