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.