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US proposes 25% tariff on Chinese e-bikes

Posted on in Cycles News

As reported in Bicycle Retailer and Industry News (BRAIN) Chinese-made e-bikes, including Trek, Giant, Raleigh Electric, Pedego and other brands, would be subject to a 25% tariff when imported to the US, under a new proposal.

E-bikes are one of the fastest growing segments of the U.S. bike industry, with some suppliers reporting double-digit - or even triple-digit - year-over-year sales increases the past few years. About 10 states have passed industry-proposed laws regulating the bikes, which has encouraged sales growth in those states.

The tariff, which could take effect in a matter of months, would increase the retail price of the bikes by hundreds of dollars.

Some bike brands say a 25 percent tariff on import cost would be multiplied roughly three times, in dollars, at retail price. So an e-bike valued at $1,000 at Customs would be slapped with a $250 tariff, resulting in a $750 increase on the sales floor. Brands with non-traditional distribution models would not increase retail prices as much.

The electric bikes are included in a list of 284 product codes, representing $16 billion in imports, released by the Trump administration. The list will go through a public comment process, including public hearings, before the U.S. Trade Representative decides whether each product code should be subject to the tariff.

The bike industry is developing a strategy to participate in the public comment process, while also lobbying the administration and Congress in hopes of getting e-bikes removed from the list.

"It's certainly a significant cause for concern," said Katy Hartnett, director of government relations for PeopleForBikes. "It's going to be all hands on deck for the bike industry. We are going to need all the help we can get."

PeopleForBikes is working with the Bicycle Product Suppliers Association and other groups to develop a campaign to remove e-bikes from the list. The USTR will formally announce details of the public comment process on Wednesday in the Federal Register. Tenetively, a public hearing is scheduled for July 24 in Washington, and the deadline for written comments is July 31.

E-bike brands are also looking at other options, including moving production and/or assembly from China to Taiwan, Europe or the U.S.
The whole situation is "frustrating and distracting," said Matt Moore, who chairs the legislative committee for the Bicycle Product Suppliers Association and is general counsel for Quality Bicycle Products.

"The frustration is that we all deal with a long horizon on product planning and sourcing and it's not easy to just up and change your manufacturer or assembler at the drop of a hat. It just doesn't work that way," Moore said. "You've been planning for a product that's not going to be available for nine months or a year, and now you don't know if it's going to have a price that's competitive."

Moore is working with the BPSA and PeopleForBikes on the subject. "This has the full attention of both organizations," he said.

"What I would tell retailers is to be attentive and we're going to have to wait and see how this plays out. And we are going to do our darndest to try to get e-bikes off that list."

Larry Pizzi, the president of Raleigh Electric and chair of the BPSA's e-bike committee, said his company is looking at options to move e-bike assembly out of China. He said many companies were already looking to do that because of the EU's proposed anti-dumping duties on China-made e-bikes. Those duties could be as high as 189 percent.

"The good news from my perspective is that all the producers were already taking action because of what's happening in Europe. They are scrambling to solve that problem so this (the proposed U.S. tariff) is just additive," Pizzi said. "No one can just eat a 25 percent duty."

Don DiCostanzo, the founder and CEO of Pedego, said a tariff on Chinese e-bikes might slow growth in the segment, but wouldn't be catastrophic. Pedego makes bikes in China and Taiwan.

"It would not price Chinese bikes out of the market, in my opinion," he said. "I don't think it will take effect, but if in the worst-case scenario it does, it is manageable from Pedego's perspective."

He said one option for the company would be to ship unassembled bikes from China to the U.S. to reduce the import value of the bikes.

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