Trade Tariff Troubles for US Bike Manufacturers

US bike manufacturers look likely to be hit with increased tariffs on bikes or parts exported to Europe, as part of the latest chapter in a tit-for-tat trade dispute between Donald Trump’s administration and the European Commission.

The US fired the first volley of import duties in May 2018, with the announcement of a tax on steel and aluminium imports fom Europe. This was intended to revive the US steel industry, but infuriated America’s trading partners. The EU responded with a series of levies aimed specifically at some of America’s showpiece exports, including cranberries, jeans, Harley Davidson motorbikes and bourbon whiskey. Earlier this month the US proposed more tariffs on goods from Europe including cheese, wine, and tariffs on bicycle parts, prompted by a long-running dispute over subsidies to the aerospace industry. So the EU has responded by publishing a preliminary list of goods, with an estimated export value of $20 billion, that could be subject to additional duties if imported from the US. These include fish, wine, tractors, and bicycle frames and components.

What this means is that your next bike purchase may be significantly more expensive if it’s purchased from the US. How much more expensive is yet to be confirmed, but previous tariffs have ranged from 10 to 50% of an item’s value.

Adding to US bike companies’ woes are a strong dollar, making exports less competitively priced. The US bike industry is ironically also being squeezed by tariffs imposed by the current US administration on imports from China. It’s no secret that President Trump views tariffs as a way of promoting American manufacturing, but the issue is that components for bikes are still overwhelmingly made in the Far East. So even if a bike company wants to source its components locally, often it’s not possible. The tariffs have prompted several big US bike brands, including Trek and Specialized, to move some of their manufacturing to Cambodia, or other countries in South Asia not subject to the import duties. Some US companies, such as lighting manufacturer Light and Motion, can’t source their components from tariff-exempt countries, and are now considering moving their assembling operations away from the US entirely, in order to avoid paying extra taxes on the parts they use.

There is a ray of hope though for US bike companies – at the same time it proposes the tariffs, the EU is making conciliatory noises. In a statement released to accompany the tariffs list, EU trade commissioner Cecilia Malmström said: “While we need to be ready with countermeasures in case there is no other way out, I still believe that dialogue is what should prevail between important partners such as the EU and the US, including in bringing an end to this longstanding dispute.” Whether the current US administration want to engage in a dialogue with the EU remains to be seen.