Vosper: Bulletins from the left side of the Atlantic – tariffs and more tariffs

The Trump administration’s new round of increased tariffs will impact some £79 million (US$1 billion; AU$1.43 billion) in bike-related goods, increasing from 10% to 25% on products arriving in the US after 1 June. This is in addition to existing tariffs, which are generally about 5-11% for cycling goods. Industry boffin and sometime CIN editorialist Jay Townley has an interesting piece about this on the US-based Bicycle Retailer & Industry News website. Here’s what we Americans would call the Money Quote: “…the current trade dispute has had a detrimental impact on all aspects of the US bicycle business that will only get worse if it continues to unfold as now forecast.”

Results are about what you’d expect: depressed import numbers (about £40 million/ US$51 million/ AU$73 million in ex-factory dollars in Q1 alone, according to inside sources), and a frantic scramble to re-source production to Taiwan, Vietnam and other Asian countries… which is not all that difficult, since the China exodus was pioneered decades ago by the EU’s longstanding anti-dumping duties; see also CIN’s take from last year on the  impact of Brexit on this question. And, as with the EU, Shanghai Bike Week attendees tell me there is no shortage of Chinese factories openly willing to create product for nominal assembly and shipment via non-Chinese nations of origin. Of course, this was before China began hinting that it might restrict export of rare-earth magnets (which is to say, high-end e-bikes) in response to its trade war with the USA. So who knows, perhaps the jiggerypokery will flow in both directions.

Also interesting is that tariffs and political climate are pushing a resurgent  interest – or at least interest in talking about interest – in reshoring bicycle frame fabrication and/or assembly to the United States. On the other hand, there are exactly zero reshoring moves to date among the industry’s quadrumvirate of largest US players (Trek/Specialized/Giant/ Cannondale, collectively represented in more than half of the 7,000-ish US retail locations). On an only slightly smaller scale, spokespeople from Pon are refusing to comment on rumours the Santa Cruz/Juliana/ Cervélo assembly facility in California has halted production.

And one hopeful launch from a few years ago, the Walton (Walmart) family backed high-end carbon brand Allied Cycle, just reported layoffs and some internal shenanigans resulting in the ousting of its founder and president.

Stay tuned for more from Rick Vosper on Cycling Industry News. And catch up here.