US Imposing Big Tariff on China Made Bikes Brings Serious Trade Disruptions

If the Trump administration lives up to its threats of imposing a 25 percent tariff on USD 200 billion worth of Chinese goods, including bicycles, e-bikes and bike parts this would bring serious disruptions to the current world trade in bikes and parts. In particular as the Unites States annually imports over 10 million bicycles that are made in China.

Yesterday the Chinese government already reacted on the earlier leaked plans of the Trump administration. The Peoples Republic stated that ‘blackmail’ wouldn’t work and that it would retaliate.

Thousands of Chinese imports targeted

The 25 percent tariff targets thousands of Chinese imports, including food products, chemicals, steel and aluminum and consumer goods ranging from dog food, furniture and carpets to car tyres, bicycles, and baseball gloves and beauty products.

According to a reports by U.S. trade magazine ‘Bicycle Retailer and Industry News’, the tariff also goes for, next to complete bicycles, lots of bike parts including  cable casing for derailleurs and caliper brakes, bike tyres, rim strips, inner tubes, frames, steel tubing, forks, wheel rims, wheel spokes, alloy hubs, three-speed hubs, two-speed hubs, freewheel sprockets, brakes and brake parts, saddles, pedals, cranksets and speedometers.

Of course the to be imposed tariff would result in cost increases that will be passed on to customers. However, as the U.S. bike market is a highly competitive one, it’s also clear that importers will be looking to take their business elsewhere. And as this multi-million business in complete bicycles is substantive this could result in disruptions for current trading.

Where are U.S. importers to turn to?

Are U.S. importers to take their business to (Eastern) Europe? If they do it raises the question whether the capacity is there and if such U.S. business will be to the detriment of existing European customers? Or are the U.S. importers to turn to other supplying countries in Asia? Then the obvious question is how the assemblers in these Asia countries are to get their parts from? Not from China taking into account the list of components that are also hit the 25 percent tariff. Or are these countries turning to the import of A + B containers from China with bike stuff? Will U.S. customs then turn to checking on the rules of origin involving anti-circumvention legislation? One conclusion stands out now and that is that a demand for over ten million bikes is not easy to ship to other counties. Even in Asia.

Before the 25 percent tariff is implemented the U.S. Trade Representative is taking comments from the industry until August 17. According to the U.S. trade publication, a public hearing is scheduled for August 20 – 23.