The bicycle industry has a new tariff problem. A newly implemented round of tariffs will put a 10 percent tax on nearly all bike-related imports from China starting next week, a tax that rises to 25 percent at the end of the year. (Both are collected on top of a pre-existing 11 percent tariff on completed bicycles.) Thousands of business owners and bike riders mobilized against the tariffs, sending letters to Congress and comments to the US Trade Representative — but despite the lobbying, bicycle categories remained on the final list distributed Monday night. With more than 14 million bicycles imported from China last year, some groups estimate the tariffs could cost the industry $250 million in 2019 alone.
It’s a somewhat unexpected target for the latest round of tariffs, put in place by President Trump in an effort to restore America’s manufacturing sector. Those tariffs have already caused chaos in the tech sector, hurting many US manufacturers who rely on components imported from China. But the full damage is far broader, impacting nearly every company doing business in China in some way.
“We’ve looked at manufacturing in the US, but it’s just not possible.”
One of those businesses is Pure Cycles, a small retailer based in Los Angeles. Established in 2010 by students at the University of Wisconsin, Pure Cycles has sold roughly 150,000 bikes in the eight years since. The company works through a direct-to-consumer model, relying on Chinese factories to keep prices under $500 for most models. With no changes to the manufacturing chain, the new tariffs would add an extra $100 to the price tag, and CEO Michael Fishman is already trying to shift production outside the country. “We’re looking at Taiwan or Vietnam or other South Asian countries,” says Fishman. “We’ve looked at manufacturing in the US, but it’s just not possible.”
But as the entire industry rushes to non-Chinese factories, finding alternate sources may be difficult. People for Bikes, an advocacy group that coordinated much of the bike industry’s opposition to the tariffs, says nearly every company selling bikes in the US is facing the same problem. “We have such a high proportion of complete bicycles coming in from China,” says policy director Alex Logemann, “the effect on the industry is quite dramatic.”
The move comes as many municipalities are trying to encourage bike riding as a way to reduce traffic and carbon emissions. The restrictions would also affect the growing trend of bike share programs, “significantly increas[ing] the cost to implement and operate bikeshare,” according to a statement by the North American Bikeshare Association. Notably, electric-powered bikes are not included in the current round of tariffs, but are subject to a previous 25 percent import tax put in place in August.
Not everyone is unhappy with the new tariffs. One letter in support of the tariffs came from Saris Cycling, which manufactures bike racks and training rigs in Madison, WI. As a domestic manufacturer, Saris wouldn’t be affected by the latest round, and sees the new import tax as a way to level the playing field with Chinese-made competitors. Saris relies on international markets for raw materials, and was hit hard by a March round of tariffs on steel and aluminum imports, which caused prices to rise by 17 and 25 percent, respectively. Offshore competitors were unaffected by that shift, and in a letter earlier this month, Saris CEO Chris Fortune presented the latest round of tariffs as a way to create fair competition.
“Without this action by the President, we will be at an extreme disadvantage through no fault of our own,” Fortune wrote. “Foreign manufacturers will have cost advantages that will be difficult to overcome.”