Tariffs On Bicycles And Bike Parts--To Curb Illegal Immigration and Fentanyl Importation?

A Getty Image

 

One of the gusts in the storm of the opening days of Trump's second term is a round of tariffs on goods from Canada, China and Mexico.

Yesterday, the charges against Canada and Mexico were paused for 30 days,  but the ones aimed at China are still in effect.  Meanwhile, the United States Postal Service rescinded its announcement that it would cease accepting packages coming inbound from China and Hong Kong.

So what does all of this have to do with the cycling world?

Well, the effects on levies on Chinese goods--imposed on top of the duties and fees already charged--seem obvious at first glance.  About 87 percent of the bicycles sold in the United States are made in that country.  So are most accessories and helmets, and many items of footwear and clothing.  But those all of those items still account for only half of the money spent on bicycle-related goods in the US, mainly because most of the bikes are for kids or low-end models for adults.  While some carbon and other high-cost frames are made in China, the majority come from Cambodia, Vietnam and other countries.  "The specialty bike industry has moved out of China," one manufacturer's representative declared. "Any one that is still there has only themselves to blame."

Even so, many bikes and e-bikes that are "made in" Vietnam, Cambodia or even North America or Europe are built around frames that are made in China to be finished and assembled where they are "made."  And even if the frames are welded and painted in the US, there's still a good chance that some parts are made in China. So even if the manufacture of mass-market bikes returns to these shores (most of the bikes, or more exactly, frames built in the US are custom or limited- production), whether or not the tariffs will apply isn't clear.

As for our neighbors to the north and south, together they account for about a thirtieth of the sales volume of bikes and bike-related products from China sold in the US. Spinergy has been making wheels for bicycles (and wheelchairs) in Mexico for at least three decades; other companies, like Yakima, also made products there but have since shifted production elsewhere. But there hasn't been significant bicycle production in the country for decades; its best-known brand--Windsor--is now made in Asia and sold via eBay and direct-to-consumer outlets.  Most of Canada's sales in the US come from companies that operate on both sides of the border; thus, a bike coming crossing the northern border is likely to have come from elsewhere.

There are rumors that Trump will target the European Union next, but that--and retaliatory tariffs, if the EU decides to impose them--would be attached mainly to automotive and agricultural products, two categories in which the US is running a trade defecit.

Does all of this mean that you should run out and buy a new bike or helmet or stock up on parts you might need?  I don't know.  And what is the Fake Tan Fuhrer's rationale for the tariffs?  Fentanyl imports and illegal immigration.  How those things will be affected, I also don't know.  Nor do better minds than mine.

Trade War Sends Giant Back To Its Roots

When Trumplethinskin announced tariffs on goods from China, one thing was clear to anyone with an IQ of room temperature or higher:  Jobs would not suddenly re-appear in Ohio and Michigan and Pennsylvania.  Of course, El Cheeto Grande, not being a member of that exclusive club, went ahead with his move.  

Maybe I am not giving him enough credit for his intelligence:  After all, sold the promise of jobs returning, as if they'd simply migrated for a season, to large numbers of people.  Then again, at least some of those people are as desperate as he is avaricious or delusional, depending on what you believe.

So what are the results of those tariffs, so far?  Well, for one thing farmers--many of whose livelihoods are tied to exporting what they grow--are losing sales.  And it doesn't look like jobs are coming back to the US, at least not in the bicycle industry.

Prices are already increasing for many bikes and related goods.  But the world's largest bicycle producer found another way to deal with those new import taxes:  going back to its roots.

I am talking about Giant.  Chairwoman Bonnie Tu said, "we took it seriously," when Trump announced a 25 percent surcharge on almost everything coming from China.  "We started moving before he shut his mouth."

Giant's factory in Taichung City, Taiwan

That meant, of course, she had a very short window of time in which to act.  But act she did:  She shifted production of the company's US-bound bikes from its Chinese factories to the company's headquarters in Taichung City, Taiwan.

The first Giant bikes sold in North America during the 1980s were made in Taiwan.  So were all of the products the company exported to the America, and most to the rest of the world, during the 1990s and early 2000s.  

Bonnie Tu

Ms. Tu says, though, that the company's long-term plan involves moving as much production as possible as close to the markets as is feasible.  Right now, in addition to its Taiwanese facility and the five factories it operates in China, Giant also has a plant in the Netherlands and has announced they are building another in Hungary.

Will Giant start making bikes in the US?  Ms. Tu hasn't said as much, but it wouldn't surprise me if they set up shop in some low-wage "right to work" state in the South.  If they do, I just hope the bikes are better than some of the stuff that came out of Schwinn's since-shuttered Greenville, Mississippi plant.

What Gears Are Turning In His Mind?

Some time in your childhood, you probably had, at least once, the sort of teacher who punished everyone in your class for something one kid did.  

That, I believe, is the sort of teacher Donald Trump would have been had he pursued the life of an educator.

At least, that is what I believe after seeing one of his latest threats. If he acts on it, some $11.5 billion in goods from the EU could be subject to retaliatory tariffs.  Among those items are hubs and sprockets.

So why does El Cheeto Grande want to slap punitive taxes on wheel goods and gears?  Well, he rationalizes this threat with a World Trade Organization ruling from last May, which found that Airbus had received illegal subsidies from European countries and gave the US the right to impose retaliatory tariffs.

What he didn't mention, however, is a more recent WTO ruling, specifically from last month:  Boeing, which just happens to be Airbus's main rival, received similarly illegal tax breaks in the US.  Thus, said the WTO, the EU can impose sanctions on imports from the US.

Now, I thought really hard about why freewheels, cassettes and hubs for bicycles--or motorcycle hubs or sprockets--are targeted for tariffs that are supposed to punish Europeans for supporting their aerospace industry.  All I could come up was this:  Aircraft have wheels, which use hubs.  And their engines use gears, i.e., sprockets.  So, perhaps, anything that could potentially help an A-380 take off, fly or land is fair game for new taxes.

Hmm...I'm not sure that works.  I must say I tried, really tried, to understand the logic of the threat. But then I remembered:  This is Donald Trump we're talking about.