TARIFF UPDATES, OPTIMISM FOR CARGO BIKES, USED E-BIKES

By Jay Townley

10 14 25: “Highest U.S. tariffs since the 1930s redraw the international trade map.” Bloomberg: “America’s trading partners are rushing to seal new trade deals to blunt the hit from Trump’s protectionism. Canada is importing more cars from Mexico than from the U.S.. China has snubbed American soybean farmers at harvest time and is buying from South American growers instead. India and China are resuming direct flights between the two countries and trading rare earths, ending years of frozen relations. The new contours of global commerce are starting to emerge as governments redraw trade alliances and companies seek other markets to avoid the highest U.S. tariffs since the 1930s. Smaller economies are also adapting to a world where U.S. consumers and companies are costlier to reach. Peru is seeking buyers in Asia for its blueberries, and Lesotho, a textile producer, is pivoting to Asia, Europe, and the rest of Africa. A group of 14 countries that includes New Zealand, Singapore, Switzerland, and the United Arab Emirates has formed a partnership to boost trade and investment. The global economy has defied expectations of a recession triggered by a tit-for-tat retaliation against President Donald Trump’s tariffs. Instead, America’s turn toward protectionism has demonstrated the durability of the 85 percent of global trade that occurs outside the U.S.. In October, the World Trade Organization (WTO) revised its forecast for merchandise trade growth in 2025 from 0.9 percent to 2.4 percent, in large part because of the effects of so-called front-loading ahead of tariffs. The IMF’s latest World Economic Outlook, released today, noted that while this dynamic helped support trade volumes this year, it expects growth to drop to an average of 2.9 percent over 2025-26, rather than the 3.3 percent it had predicted a year ago.” HPS ANALYSIS: COVID and the pandemic were the catalysts that started to change everything, and the United States tossed what was left in the air when it changed the way nations trade and conduct commerce with each other. Treaties, alliances, and world order since the end of the Second World War have all been thrown to the winds, and countries are reaching out to make new alliances and commercial trading relationships. The U.S. has totally shifted in 11 months to a protectionist state with, as the title of this article says, the highest import tariffs since the 1930s, and has redrawn the international trade map. This is a dynamic work in progress.

10 14 25: “Goldman Sachs sees U.S. consumers paying more than half of tariff burden.” SGB Media: “A recent Goldman Sachs report finds that American consumers will absorb 55 percent of the costs from President Trump’s tariffs this year as companies raise prices. American businesses and foreign exporters will bear 22 percent and 18 percent of the costs, respectively, while five percent of the costs will be evaded, according to economists Elsie Peng and David Mericle in a Goldman Sachs report published Sunday, October 12. The report also notes that ‘American firms will pass on their costs to consumers over the next few months.’ ‘At the moment, however, U.S. businesses are likely bearing a larger share of the costs because some tariffs have just gone into effect and it takes time to raise prices on consumers and negotiate lower import prices with foreign suppliers,’ said Goldman Sachs in the report. The report also adds, ‘If recently implemented and future tariffs have the same eventual impact on prices as the tariffs implemented earlier this year, then U.S. consumers would eventually absorb 55 percent of tariff costs.’ The wide-ranging levies will likely hike the inflation rate to three percent, well above the Fed’s two percent goal, by December, according to the report. Trump’s tariffs have already pushed core personal consumption expenditure prices, which are used in the Fed’s key inflation reading, up by 0.44 percent so far this year, the economists wrote. While the president has claimed that foreign countries will pay the costs of the levies, the Bureau of Labor Statistics said last month that consumer prices in August were up 2.9 percent from August 2024. Addressing the report in a media statement, White House spokesman Kush Desai said, ‘The president and administration’s position has always been clear: while Americans may face a transition period from tariffs upending a broken status quo that has put America last, the cost of tariffs will ultimately be borne by foreign exporters. Companies are already shifting and diversifying their supply chains in response to tariffs, including by onshoring production to the United States. Americans can rest assured that the administration will continue to deliver economic relief from Joe Biden’s inflation crisis while laying the groundwork for a long-term restoration of American greatness,’ Desai added. The Trump administration has also pointed to the billions in revenue the duties have brought into the U.S.. In September, tariff revenues totaled over $31 billion, bringing the year-to-date haul to about $215 billion. Goldman’s analysis is hinged on a sizable ‘if,’ since Trump’s tariffs are constantly evolving during trade talks with foreign nations.” HPS ANALYSIS: So far, the administration has focused on food items to reduce the pain American consumers are feeling as the result of tariffs, but as most, if not all of you know, rising food costs are a relatively minor piece of the cost increases American consumers and households will be absorbing as the result of tariffs over the next 12 to 18 months. Goldman Sachs is forecasting that consumers will eventually pay 55 percent of tariff costs. 45 percent will be absorbed by source OEMs, source countries, importers, wholesalers, and retailers, the channels of distribution. These percentages will shift around over time as they are impacted by events, but the fact remains that 50 to 55 percent of the cost of tariffs will be paid by consumers, spread over everything required to survive. While the other 50 to 55 percent will be paid by the supply chain, some of that cost will impact consumers in the form of wages, benefits, and social services spinning out of those portions of the supply chain that touch employees and their dependents.  

10 18 25: “Why more parents are riding cargo bikes, skipping the minivan.” National Public Radio NPR: “If you live in any major city or suburb in the U.S., you may have noticed more and more parents hauling their kids around on bulky cargo bicycles. Some families are ditching their second car, forgoing a minivan, or going car-free altogether. Cargo bikes have been around for more than a century, and they're popular elsewhere on the globe. But until a few years ago, they were all but forgotten in North America. Now they're making a comeback. There are a few reasons behind the surge in cargo bike ridership, including better bicycle infrastructure and bikes that are easy to ride, even if you're not an athlete. Lelac Almagor was not a biker before she bought her cargo bike. ‘I'm a very lazy person,’ Almagor says. She thought she'd give the bike a try and probably return it. ‘But by the third day I was like, 'Oh, this is actually going to change my life,’ says Almagor, who lives in Washington, D.C. Now she rides her three kids to school every day, even when it's pouring rain or hot and muggy. ‘It's such a better start to my day, that now there's truly not weather that I would rather drive in,’ Almagor says. She bought the bike six years ago. Back then, she'd see maybe one other cargo bike parent at school. Now there are dozens crowding the bike racks, not to mention the riders she sees heading to other schools. Almagor got so into cargo bikes, she left her teaching career and now works for a bike company … Today's cargo bikes are designed specifically for transporting kids, with comfy seats and rain canopies, and, importantly, electric motors. Philip Koopman, a longtime D.C. bike shop owner, says there were no electric cargo bikes when his kids were young. He toted them around the city in a trailer behind his bike, muscling up hills. ‘Most people don't want to be sweaty when they get to work,’ Koopman says. ‘So having these different options, it just makes cycling so much more attainable for so many more people.’ On a recent Saturday, Koopman was helping people test ride cargo bikes at the DC Family Bike Fest. The event drew hundreds of parents, including Patricia Stamper, who was trying out different bikes with her two kids. ‘I'm 39, I'm losing weight, I need some help,’ Stamper says. ‘And this is cheaper than bariatric surgery, it's cheaper than Wegovy.’ The bike she's eyeing is pricey, at around $2,500. But she thinks it'll be worth it to get some exercise, get her kids to school, ride to work, and go shopping. While cargo bikes are expensive, riders point out they're much cheaper than cars, especially when you account for gas, insurance, parking, and maintenance. Better bike infrastructure: The first protected bike lane in the U.S., separated from car traffic, was installed in 1967 in Davis, Calif. But it wasn't until 40 or 50 years later, in the 2000s, that other cities followed suit. Now such lanes can be found all over the country. Minneapolis is often ranked as the best cycling city in the nation, with more than 200 miles of bike lanes and trails. ‘If it's not safe to ride a bike, it's going to be hard to get people on bikes,’ says Laura Mitchell, who lives in the city.” HPS ANALYSIS: For over a year, HPS has been advising bike shops and suppliers to first craft a business plan to survive, followed by a business plan to thrive. There are two solid components of both plans in this article: cargo bikes and safe places to ride. Electric cargo bikes have been around for years, but became an important piece of the product mix during the pandemic, and emerged as a leading product category. Bike shops have to get involved in their communities to successfully market and sell cargo bikes, starting with becoming familiar with the products and service requirements, followed by an understanding of the safe routes to and from schools and shopping areas. As this article points out, bike shops need to include in their business plan getting involved in cargo bike activities and advocacy, and the same goes for safe bicycling routes and advocacy. Remember, every NBDA member automatically becomes a member of the League of American Bicyclists and has access to its resources.

10 19 25: “Global economy 'yet to feel the pain' from tariffs, European Central Bank president says.” Politico: “The president of the European Central Bank said Sunday that the world’s economy has ‘yet to feel the pain’ from President Donald Trump’s tariffs. Speaking on CBS’s Face the Nation, Christine Lagarde said that at some point, the exporters and importers will no longer accept smaller profit margins caused by tariffs and decide to raise prices. ‘These two-thirds borne by two corporates, essentially, the exporter and the importer, is based on a squeeze of their margins,’ she said. ‘How long are they going to put up with a squeeze of the margin is to be seen. And when they don’t, because it’s becoming too tight, then it will be on the consumer. So it’s a question of time.’ Lagarde told host Margaret Brennan that tariffs were one of two factors that have led to the global economy being ‘in transformation,’ the other being advancements in technology. ‘Transformation,’ she said, ‘I think, caused by a couple of things. One is the tariffs, which have changed the map of trade around the world and reconstituted new alliances and reformed the way in which we trade with each other. I think the second major transformation is the impact of artificial intelligence on everything we do, from data management to dating and everything in between.’ Lagarde has been head of the European Central Bank since 2019. Previously, she served in France’s government, including as minister for foreign trade, and as managing director of the International Monetary Fund. She said she thought part of the current trade war between the United States and China was posturing. ‘I would discount a little bit of the positioning at the moment because this is typical of negotiating tactics on both sides ... You show your muscles and you say that you’re ready to kill. I’m exaggerating, of course. But people will have to come to the table because it’s in the interest of both economies, despite the hostility that there is between the two.’” HPS ANALYSIS: Cristine Lagarde, president of the European Central Bank, is one of the world’s financial leaders that HPS follows and listens to very carefully. Her observation that the global economy has yet to feel the pain from tariffs because the exporters and importers are currently absorbing the largest portion of the extra cost is, in HPS opinion, accurate. Like Goldman Sachs, Lagarde knows what is coming as a part of the “transformation” she has identified is a greater percentage of the cost of tariffs being passed on to consumers. This will not happen until early 2026, but it is coming, and its economic implications are inevitable.

10 20 25: “Trade enforcement expands under the second trump administration: what importers need to know.” Mondaq: “In the current importing landscape where heightened tariffs are the norm, not only is more money at stake, but also more risk. Since the beginning of the second Trump administration, the government has made combating trade fraud a priority, reorganizing and enhancing its resources to target tariff evasion and import smuggling, and relying more heavily on alternative civil and criminal legal authority for enforcement. Trade Law Enforcement Authority: Duties are calculated based on a variety of factors, including tariff classification, dutiable value, and country of origin. When bringing goods into the United States, an importer must declare this information to U.S. Customs and Border Protection (CBP), in part to allow CBP to properly assess duties on imported goods. False declarations can result in the assessment of a lower amount of duty than is actually owed and deprive the government of revenue. Traditionally, such activity has been dealt with under the provisions of Section 592 of the Tariff Act of 1930, 19 U.S.C. § 1592, paragraph (a)(1)(A) of which states that ‘no person, by fraud, gross negligence, or negligence’ may ‘enter, introduce, or attempt to enter or introduce any merchandise’ into the United States by means of any material false statements or omissions.’ Under the statute, an offending party may face civil penalties up to the domestic value of the imported goods. CBP directs the investigation and penalty proceedings and issues administrative notices that give the alleged offender the opportunity to mitigate and to satisfy penalty demands before CBP files an enforcement action in court. But the government has other tools in its toolkit for combating fraud against the United States, one of which is the False Claims Act (FCA). The relevant statute, 31 U.S.C. § 3729(a)(1)(G)—known as the ‘reverse false claims’ provision—penalizes any person who ‘knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the government,’ in an amount equal to three times the damages, plus a penalty of up to $28,619 per claim. A key feature of the FCA is its ‘qui tam’ provision, under which private parties, known legally as ‘relators’ and familiarly as ‘whistleblowers’ may bring cases on behalf of the government and receive up to 30 percent of the total recovery, which provides a strong economic incentive for employees and others to alert the government to a company's customs evasion.’” HPS ANALYSIS: Some of our readers may have read the Guest Editorial: “Why customs cheating threatens our integrity” that appeared on page 4 of the November print issue of BRAIN. Importers of record are responsible for tariff evasion, not retailers. With this said, in 2025, the DOJ signaled a more aggressive posture in enforcing tariff evasion under all available authorities and implemented organizational changes to put more teeth in the enforcement program. Most recently, on August 29, the DOJ and the Department of Homeland Security (DHS) announced the creation of a cross-agency Trade Fraud Task Force to target tariff and duty evasion. This task force, which will ‘leverage expertise from both the civil and criminal divisions’ alongside both CBP and DHS's Homeland Security Investigations (HSI), is charged with "pursuing those who violate customs laws through duty and penalty collection actions under the Tariff Act of 1930, actions under the False Claims Act, and, wherever appropriate, parallel criminal prosecutions, penalties, and seizures under Title 18's trade fraud and conspiracy provisions." In light of increased investigative and enforcement activities, companies should prioritize customs compliance. First, any importer should consider conducting a thorough self-audit and voluntarily disclose any past unlawful behavior. Section 592, the FCA, and the DOJ's Criminal Division have disclosure provisions that may allow a company to reduce any penalty by reporting and remediating its errors before knowing of any governmental investigation. Even if nothing unlawful is uncovered, an audit will give the company the opportunity to strengthen (or develop) its customs compliance program. Second, importers should be wary of schemes that promise to reduce duty liability with little detail, including using delivered duty paid (DDP) terms. As tariffs increase, mitigation strategies become more attractive as compliance becomes more complex. Shifting sourcing to change the country of origin, instituting a first sale program to reduce value, and tariff engineering to change classification can all be lawful ways to reduce liability. Misstatements of fact and transshipment are not. Always consult customs counsel before instituting a new approach and scrutinize proposals that seem too good to be true. Third, be sure promptly to elevate any communications from CBP, DOJ, or other agencies regarding import activity to senior company officials and legal counsel. Failure to respond quickly and accurately to simple requests for information can unnecessarily escalate a mere mistake into a full-blown investigation or signal a lack of cooperation with authorities. HPS advises readers to consult with their trade advisors and attorneys with questions and to seek specific advice.

10 24 25: “New Florida bill to require license for e-bikes, updates driver’s licensing test.” electrek: “A newly filed bill in Florida is aiming to change the way the sunshine state regulates high-speed electric bicycles. If it passes, it could have significant implications for riders and retailers alike. The proposed legislation, HB243, was filed by Republican Representative Yvette Benarroch, and is set to be considered during Florida’s upcoming legislative session. The bill introduces several new requirements for electric bike and scooter riders, including a mandatory driver’s license or learner’s permit for anyone operating a Class 3 e-bike. That’s an e-bike capable of pedal assist at speeds between 21 to 28 m.p.h. (32 to 45 km/h). While Florida law currently allows anyone over 16 to ride all legal classes of electric bikes without a license, this new bill would tighten that significantly. It also seeks to add e-bike and scooter safety content to the learner’s permit course and Class E driver license test, meaning future drivers would need to demonstrate knowledge of how to safely interact with these smaller electric vehicles. In addition to licensing, HB 243 would:

• Create a new ‘electric motorcycle’ category for higher-speed electric vehicles, likely intended to encompass bikes like those from Sur Ron and other light electric dirt bike makers.

• Ban riders under 16 from operating any electric motorcycle with 750W or more of power.

• Require e-bike and scooter riders to yield to pedestrians on shared paths and use audible signals when passing.

• Mandate crash reporting for incidents involving e-bikes and scooters.

• Establish penalties for tampering with a motor or speed limiter on an electric bike.

Electrek’s take: This is one of the more heavy-handed e-bike regulation proposals we’ve seen at the state level, and it raises real questions about access, enforcement, and equity. Adding e-bike content to driver’s ed makes a lot of sense. There are a lot more micromobility EVs on the road now, and drivers need to understand how to safely share the road. But requiring a license for an e-bike that passes over the 20 m.p.h. Class 2 threshold? That’s a big step away from treating e-bikes like bicycles and toward treating them like mopeds or motorcycles. E-bikes have long been an alternative for folks who don’t want to deal with the regulatory and bureaucratic hassle of motor vehicles, and treating Class 3 e-bikes like motorcycles feels like a step in the wrong direction.” HPS ANALYSIS: In attempting to stretch the definition of a bicycle, HPS has concluded that the class language has gone too far. A bicycle is defined by the U.S. Consumer Product Safety Commission (CPSC) §1512.2 as either (1) a two-wheeled vehicle having a rear drive wheel solely human-powered; or (2) a two- or three-wheeled vehicle with fully operable pedals and an electric motor of less than 750 watts (1 h.p.), whose maximum speed on a paved level surface, when powered solely by such a motor while ridden by an operator who weighs 170 pounds, is less than 20 m.p.h. HPS has reached the conclusion that since this is the mandatory definition for purposes of standards and regulation in the U.S., all bicycles that do not meet this definition are not bicycles and should be regulated by another federal agency. HPS is more than happy to discuss this position and will be including this in its 2026 presentations.

10 26 25: “U.S., China sound confident note after trade talks.” The Wall Street Journal: ”Top U.S. and Chinese negotiators sounded a positive note on weekend trade talks, hailing what they called constructive discussions ahead of a meeting between President Trump and Chinese leader Xi Jinping planned for this week. ‘I think we have a very successful framework for the leaders to discuss on Thursday,’ U.S. Treasury Secretary Scott Bessent said after two days of trade negotiations in the Malaysian capital. Chinese Vice Commerce Minister Li Chenggang separately told reporters that ‘the two sides have reached a preliminary consensus’ on possible solutions for issues that have rocked relations between the world’s two largest economies. The talks covered a range of issues, including export controls, extensions to the suspension of reciprocal tariffs, and cooperation to tackle the illicit trade in fentanyl, according to Bessent and Li. They also discussed purchases of agricultural products, access to rare earths crucial to making everything from cars to jet fighters, TikTok, and the overall U.S.-China relationship, Bessent said. ‘The U.S. has been tough in conveying its position, whereas China has been firm in defending its own interests and rights,’ said Li, a top aide to China’s Vice Premier He Lifeng, who headed the Chinese delegation. The trade talks in Malaysia aimed to ratchet down tensions between the countries and lay the groundwork for further discussions at the expected Trump-Xi summit, which will be the first in-person meeting of the two leaders since Trump began his second term. When asked whether the U.S. and China would extend a trade truce set to expire Nov. 10, during which both countries agreed to lower tariffs, Bessent said, ‘Coming out of this meeting, I would say yes, but that is at the end of the day, President Trump’s decision.’ Bessent later said on ABC’s This Week that he thinks the U.S. has averted having to impose 100 percent tariffs on China that Trump threatened to put in place if Beijing moved ahead with plans to restrict the exports of rare-earth minerals. ‘I believe they are going to delay that for a year while they re-examine it,’ Bessent said. Trump would likely visit Xi in China in early 2026, while Xi might visit the U.S. later next year, Bessent told NBC News in a separate appearance. Li, the senior Chinese negotiator, said both sides will now go through internal approval processes for implementing their preliminary consensus. He didn’t offer specifics from the talks. Trump arrived in Kuala Lumpur on Sunday for a regional gathering of Southeast Asian leaders, his first stop on a trip that will include Japan and South Korea, where he is expected to meet Xi. Trump, speaking aboard Air Force One en route to Malaysia, said he hoped to leave the Xi meeting with ‘a complete deal,’ saying, ‘We have a really good chance of making a really comprehensive deal.’” HPS ANALYSIS: We can always hope, but as we will see, the U.S. sounded a positive note after the trade talks, but so far, the reality of what was accomplished was somewhat less positive, at least from the American perspective. HPS has urged caution since the first trade talks with China earlier this year, and as our readers will see as they progress through this month’s edition, the U.S. and China will be back at the negotiating table before mid-year 2026. Meanwhile, there is a trade truce of sorts.

10 27 25: “People are having fewer kids. Their choice is transforming the world's economy.” National Public Radio NPR: “Ashley and Nick Evancho say raising their three-year-old, Sophia, is one of the most joyous things they've ever done. ‘Watching my daughter run around in the yard is otherworldly for me,’ Ashley said on a recent afternoon in their home in Grand Island, a suburb of Buffalo, N.Y. But the Evancho’s also made a decision that's increasingly common for families in the U.S. and around the world: One is enough. ‘I don't need another one. I don't want another one. I love having only one child,’ said Ashley Evancho, who works as a financial planner. Her husband, Nick, an Episcopal priest, agreed that big families make less sense in today's economy. ‘It really stacks the chips economically against you,’ he said. Worldwide, the number of children born to the average family has dropped by more than half since the 1970s, according to the latest United Nations data. Economists say having fewer children is the norm for many families, especially in relatively prosperous countries like the U.S. The trend is leading to populations that are dramatically older and beginning to shrink in many of the world's biggest economies. ‘This demographic issue is poised to potentially remake so much of our society,’ said Melissa Kearney, an economist at the University of Notre Dame. Experts say a rapidly aging and gradually shrinking population in the world's wealthiest countries could force sweeping changes in people's lives, causing many to work longer before retirement, making it harder for business owners to find employees, and destabilizing eldercare and health insurance programs. Already, women in the 15 countries that account for 75 percent of global gross domestic product, including the U.S., are having too few children to maintain a stable population. Many of those nations have fallen into the ‘very low’ category of ‘total fertility rate’ identified by the U.N. as a serious concern. ‘For the countries below 1.4 births per woman, we see much faster population decline and a pronounced shift in the population age distribution to the older ages,’ said Vladimíra Kantorová, the U.N.'s chief population scientist. The rate of births per woman in the U.S. dropped to 1.6 in 2024, the lowest ever. In China, Japan, Italy, and South Korea, deaths already outpace births. Demographers say more high-income countries would face population decline if not for high rates of immigration.” HPS ANALYSIS: This may be the most important article of this month’s whole issue. As we will see, the global bicycle industry has little or no real understanding of the demographics of the consumers they are selling products and services to. This article touches on one of the most important global demographic shifts impacting consumers worldwide. Birth rates are down, resulting in fewer younger consumers, as the number of older, aging consumers increases. NBDA has recently worked with Sports Market Surveys (SMS) in developing a comprehensive primary consumer research study. NBDA has a slide deck and has worked hard at trying to find sponsorship for this research. The NBDA recently shelved this research project because funding was not available. The bicycle industry companies that were approached stated that they cannot afford to fund consumer research. HPS puts forward the opinion that the bicycle industry can not afford not to fund this research.

10 27 25: “The U.S. shouldn’t need another warning on rare earths.” Bloomberg: “The trade war with China may not have gone as the White House hoped, but exactly as it should’ve expected. Rather than capitulating, Chinese leaders leveraged their commanding position in mining and processing rare earth metals to pressure the U.S. into bargaining. News that the two countries may have reached an agreement that would delay those Chinese curbs for a year is welcome. Still, China’s gambit should be a deafening wake-up call. Piecemeal Western efforts to break the Chinese stranglehold on rare earths must be put on an emergency footing. The restrictions announced earlier this month were sweeping. License requirements were to be gradually introduced for the export of products containing even trace amounts of certain rare earths, with additional limits placed on high-performance batteries and minerals processing technologies. In direct imitation of the Foreign Direct Product Rule the U.S. has used to limit semiconductor exports, the new rules extended to magnets and other specified components produced overseas, if made using Chinese inputs or technologies. Such goods are critical to many weapons systems, from submarines to F-35 fighters. Officials in Beijing claimed ordinary businesses would have nothing to fear, only foreign militaries. In reality, earlier promises to speed up licenses took months to fulfill. Despite Pentagon efforts to reduce its reliance on Chinese supply, arms production has already been impacted. Even if the rules are suspended, automakers and other manufacturers know that China can hold them hostage by tightening restrictions at any point. U.S. options are limited. Escalation, as the president himself has admitted, could cause the U.S. as much pain as it does China. Meanwhile, allies such as Japan and South Korea, which hold stockpiles that could be crucial to defense supply chains, may be reluctant to help out the U.S. after months of threats and bullying on trade. A truce shouldn’t obscure the glaring lesson: The U.S. urgently needs to accelerate efforts to develop a non-Chinese supply chain for critical minerals and magnets, working with resource-rich nations such as Australia and Brazil to spread the burden rather than focusing so heavily on reshoring mining and processing.” HPS ANALYSIS: This is, unfortunately, what HPS anticipated. The bicycle business is up to its neck in the rare earth issue because the electric motors used in electric bicycle propulsion systems incorporate rare earth magnets. Weapons systems are important, but so are e-bikes, at least to the bicycle business and bike shops. 

10 28 25: “Shimano's 2025 revenue rises, but global market headwinds bite operating income.” Bike Europe: “Shimano Inc. reported modest sales growth but a steep decline in profit for the first nine months of 2025, as global bicycle market corrections and foreign exchange losses weighed on its results. In Shimano’s bicycle components division, its core business, the Japanese company generated 266,243 million yen (€1.5 billion) in sales, up around 5 percent year-on-year. Meanwhile, the operating income level dropped 27 percent to 30,161 million yen, reflecting weaker margins and persistent inventory challenges. European inventory troubles: In certain key markets, Shimano reported inventory levels remained relatively high. Though retail sales of completed bicycles were bolstered by stable weather conditions in the European market, Shimano reported market inventories were at a ‘somewhat high level.’ The same is true in the Chinese market, where cycling-for-sport retail sales have stagnated, leaving inventories high. In Shimano’s home market of Japan, soaring prices of completed bicycles caused retail sales to slump, but inventories were maintained at an ‘appropriate level.’ Shimano also reported slowing sales and weaker retail demand in Asia, Central and South American, and Oceanian markets, but these trends were offset by an improving market inventory overall. Meanwhile, in the volatile North American market, ‘retail sales of completed bicycles remained weak due to an uncertain economic outlook, but market inventories maintained appropriate levels,’ according to Shimano. Shimano noted that the global economy remained firm during the first nine months of 2025. ‘Views on the economic outlook continued to be cautious due to changes in trade policies around the world and rising geopolitical risks caused by prolonged international conflicts.’ Shimano’s Q3 2025 results show that foreign exchange fluctuations had one of the most significant effects on profitability this year. The Japanese company recorded 18,387 million yen (€104 million) in foreign exchange losses, roughly double the 9,037 million yen loss in the same period last year. Shimano attributes its overall valuation loss to foreign exchange and net income decreases. With these factors in mind, Shimano is sticking to its forecast for the year, with a 2 percent revenue increase, a 29 percent decrease in operating income, and a 60 percent decrease in net income compared to 2024.” HPS ANALYSIS: Shimano is one of the few truly global suppliers to the bicycle industry. Accordingly, Shimano is affected by the dynamics of European, Asian, and North American bicycle markets. Foreign exchange fluctuation is mentioned as having one of the most significant effects on Shimano’s profitability in 2025. As our readers will see, the Taiwan dollar is 55 percent undervalued against the American dollar, the most in the world. Shimano, and many other component manufacturers and OEMs, conduct transactions in U.S. dollars, and Taiwan is the source country for large quantities of high-end bicycles and e-bikes. Shimano, like leading OEMs such as Giant Global Group, is also heavily invested in China, which is now mired in a deflationary cycle characterized by falling prices, weak consumer demand, and economic challenges, with the Consumer Price Index (CPI) showing a year-on-year decrease.  

10 28 25: “The Quest for a Cheaper E-Bike.” Bloomberg: “At a warehouse in East Williamsburg, Brooklyn, electric bikes are everywhere. Dozens of them line the space, some with cargo baskets, some with super-fat wheels, some with kids’ seats. A scrum of mechanics attends to a queue of inspections near a photo shoot setup. This is the New York City hub for Upway, a French-based company often described as the ‘Carvana for e-bikes.’ It refurbishes and resells second-hand machines, offering them to new riders at a discount of about 40 percent compared to buying new, the company says. This is its first U.S. location, with the warehouse giving the four-year-old firm a foothold in the U.S. market (it has a second site in Los Angeles). And its arrival signals a new stage in America’s relationship with the world’s most popular EV. Between 2019 and 2022, e-bike sales quadrupled in the U.S., propelled by a COVID-era appetite for open-air commuting and outdoor fun. Last year, the industry notched about 1.7 million units sold. And in an age when the average new car sells for more than $50,000, meeting one’s mobility needs with a high-tech two- or three-wheeler can seem more appealing than ever. But e-bike adoption also faces some significant headwinds, starting with their price. Retailing for $2,000 on average, battery-boosted bicycles are significantly more expensive than their pedal-only kin. High-end models, such as the motorcycle-like Super73 or the line of e-bikes from electric carmaker Rivian, can be more than twice that. While some states and cities have offered incentives to encourage uptake, these rebates are far smaller than the (now-expired) federal tax credits aimed at electric car buyers. Meanwhile, industry advocates see all manner of potential troubles in the U.S. market. Supply-chain woes and tariffs could bring big price increases for new bikes, whose components are mostly manufactured in China. Safety fears over battery fires and crash risks have sparked e-bike backlashes. The transportation policies of President Donald Trump have targeted the bicycle infrastructure that has helped draw new riders in many cities. And the micromobility business is a volatile one, with several much-hyped companies, including VanMoof and Fuell, shuttering recently.” HPS ANALYSIS: Upway closed a $60 million Series C funding round last week, led by an investment by Copenhagen's A.P. Moller Holding. The company said it is looking for U.S. growth and plans to open used e-bike refurbishment centers in Denver and other U.S. cities. Other investors are U.S.-based Galvanize and Ora Global, with continued support from Sequoia Capital and other global firms. The new round brings total funding to more than $125 million since Upway's founding in 2021. It is amazing what a little ink in Bloomberg will do for a circular economy company’s investment profile, and this is a strong testament to the growth potential of the circular economy and previously owned e-bikes in the future of the American bicycle business.

10 29 25: “Fed cuts U.S. interest rates again despite 'flying blind.' BBC: “The U.S. Federal Reserve pushed forward with an interest rate cut as inflation fears continue to take a backseat to concerns about a stalling labour market. It came despite the U.S. government shutdown, nearing its one-month mark, which left central bankers ‘flying blind’ about the state of the job market, economists said, because of a delay in official data. The U.S. central bank said on Wednesday it was lowering the target for its key lending rate by 0.25 percentage points, putting it in a range of 3.75 percent to 4 percent. The Fed last month cut interest rates for the first time since last December. Economists expected the move to jump-start a series of additional reductions, easing borrowing costs across the U.S.. Two voting members on the Fed's committee opposed the Fed's decision on Wednesday. Stephen Miran, who is on leave from his post leading U.S. President Donald Trump's Council of Economic Advisers, voted for a larger 0.5 percentage point cut. Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, voted to hold rates steady. A slowdown in job hiring prompted the Fed to restart its rate-cutting cycle in September. In a policy statement on Wednesday, the central bank reiterated that ‘job gains have slowed this year” and that the unemployment rate, though still low through the end of summer, has now ‘edged up." But the ongoing government shutdown has stalled the release of the official monthly jobs report for September, limiting central bankers' insight into how the labour market has fared since their last meeting. Alternative sources, including private-sector data, have pointed to an ongoing trend of sluggish hiring. The U.S. economy lost 32,000 jobs in September, according to data from the payroll firm ADP. The Labor Department did release inflation data for September last week. The figure, at three percent year-over-year, was slightly lower than economists had predicted, reinforcing the likelihood that rate-setters would vote to lower borrowing costs again.” HPS ANALYSIS: The Fed chair, Jay Powell, has, as most of our readers know, been under a great deal of pressure from the administration, but also has emerged as a solid anchor and steady hand at the Fed. The Economist opined this past week that Powell will stay on as a member of the Fed after his term as chairman is up in May of next year. It remains to be seen, but he will have to survive the next six months.

10 29 25: “Giant Group works toward resolution of labor charges in meeting with U.S. CBP.” SGB Media: “Giant Group met with U.S. Customs and Border Protection (CBP) in Washington, D.C. in late October for an official, in-person meeting. The atmosphere was described as positive and constructive by Giant, with both sides ‘engaging in extensive discussions on the company’s current status and ongoing improvement actions.’ ‘The Giant delegation team first expressed gratitude to CBP for its prompt response, which enabled Giant to clarify relevant facts in person and explain the ongoing improvements and enhancements,’ the company reported in a media statement. ‘CBP acknowledged Giant Group’s proactive attitude and actions following the issuance of the Withhold Release Order (WRO), as well as the company’s immediate engagement in constructive communication and meeting with CBP. CBP also recognized the company’s incorporation of labor rights into its corporate sustainability governance goals and active implementation.’ Giant said that during the meeting, CBP emphasized that this case is not penalizing Giant, but rather aims to ‘promote corporate improvement in labor and human rights governance through collaboration with enterprises.’ Giant also clearly stated its willingness to actively collaborate with CBP as a ‘positive example for the enhancement of labor and human rights governance.’ Giant Group further stated that it has engaged an international third-party assessment/audit organization to conduct assessments/audits, including employee interviews, document reviews, and on-site assessments of factories and dormitories, as well as comprehensive reviews of working environments and living facilities. The company said the U.S. CBP also indicated that a third-party assessment/audit report is an important component of CBP’s relevant procedures.” HPS ANALYSIS: Giant Group is, HPS believes, doing everything it can to satisfy U.S. Customs and Border Protection (CBP) and get the Withhold Release Order (WRO) lifted. However, it is HPS’s understanding that no Giant brand or Giant-produced OEM bicycles or e-bikes have entered a U.S. port since the WRO was issued over a month ago. HPS agrees with BRAIN that CBP is going out of its way to prosecute Giant and has done little or nothing to actually investigate the labor violation allegations against Giant Group. I have known Giant and purchased from them since the founding of the company in the early 1970s, and worked for the company in the mid-1990s, and do not believe they would knowingly violate applicable labor standards. HPS fears that this is, as we have said before, an example of the U.S. government making it difficult to be an importer.

10 30 25: “Eurobike surprised by withdrawal of support from German industry bodies.” Bike Europe: “The German bicycle industry association ZIV and Zukunft Fahrrad have announced that their talks with Eurobike regarding the future direction of the trade fair have failed. Together, they have decided to no longer participate in Eurobike. For more than three decades, Eurobike has been the international platform for the German industry to present itself to the world. ‘Our members have formulated clear ideas about the necessary structural and content-related adjustments. Unfortunately, we do not see any realistic chance of achieving these,’ said Ulrich Prediger, CEO of Zukunft Fahrrad and founder of leasing provider JobRad. ‘After intensive discussions with the shareholders of Eurobike, we have decided to end the cooperation,’ said Bernhard Lange, ZIV Praesidium member and managing partner of Paul Lange GmbH und Co. KG, explaining the decision. Surprise for Eurobike: ‘The announcement came as a surprise to us,’ said Stefan Reisinger in a last-minute press conference yesterday. ‘We have been in intensive discussions with the associations over the past few weeks, actually since the end of Eurobike, or even during Eurobike itself, and we have been in close, constructive communication. In our opinion, there was a high degree of overlap in interests in many areas. The fact that the associations are now ending the cooperation, or rather, no longer want to continue the discussions, is something that has seemed different to us in recent weeks.’ The 10-point plan laid down by the industry bodies last 15 July makes clear they took the future of the show seriously as they wrote, ‘Eurobike is in deep crisis. The absence of key exhibitors, significantly reduced visitor numbers, and announcements of strategic developments that are considered misguided by the associations and their members are jeopardising the future of the trade fair.’ Remarkably, the 10-point plan doesn’t take the current market situation into account and its impact on the trade show industry. Both visitors and exhibitors in many industries are looking for new and efficient means to communicate, although the importance of face-to-face contact is also recognised since the pandemic. 10-point plan for improvements: According to the 10-point plan, Eurobike should focus on everyday mobility, leisure, and sport, and reflect the diversity of the bicycle ecosystem, e-bikes and regular bicycles are equally important. The announcement of Eurobike and the development of Mobifuture as a LEV trade fair will be withdrawn. The plan also asked Eurobike to respond to changing consumer behaviour, but also to win back important partners who had previously left to organise their own in-house fairs. Therefore, the significantly increased price per square meter must also be taken into consideration, and an attractive price-performance model must be developed.” HPS ANALYSIS: HPS will admit that it does not understand all the German bicycle industry trade association names and acronyms, but was shocked when this news broke in the European and American trade publications. This basically means the end of the Eurobike trade show as the global industry has known it for decades. HPS did some research, and our findings indicate a fundamental disagreement about who the current and future European bicycle/e-bike business consumer is, their demographics now and going forward. If these findings stand up, they bring urgency to the NBDA's proposed primary consumer research in the U.S..   

10 30 25: “How tariffs will impact businesses this holiday season.” Chain Store Age CSA: “We expect most retail holiday items to be more expensive this year as a result of normal inflation, which is now running at three percent, as well as increased tariffs, including the elimination of the de minimus tariff rule. Tariffs are expected to most impact retail items imported from China or other Asian countries, which have traditionally manufactured many of the toys, clothes, and household items that we purchase. These countries also bear some of the highest tariff rates imposed this year. We expect these higher prices to dampen holiday sales marginally this year. However, employment in the U.S. remains relatively strong, meaning that most consumers still have reasonable purchasing power, which should support holiday shopping this season. It appears that U.S. retailers have done nearly everything in their power to keep from passing new tariffs on to their customers. Many importers have forced portions of the tariffs onto their suppliers abroad and are shouldering some of the tariffs themselves. Others had stockpiled inventory prior to the tariffs taking effect and have been working their way through it. However, in the coming months, we expect to reach the limits of these strategies and expect prices to rise to reflect the true cost the tariffs have imposed.” HPS ANALYSIS: Our readers have already picked up on our general concern about tariffs beginning to have an impact on business in general and specifically the bicycle business this holiday season. However, the upcoming holiday season, starting with Black Friday and related sales leading up to the Christmas season, is just the beginning. As we have reported, the financial impact of tariffs will roll out between now and the first two quarters of 2026 – and may continue into the second half of next year. 

10 30 25: “The U.S.-China trade truce is not ‘truly great,’ by Robert Burgess, Bloomberg Opinion: “‘Truly great’ is how U.S. resident Donald Trump described his much-anticipated confab with Chinese leader Xi Jinping to discuss trade between the world’s two largest economic superpowers. ‘I guess, on the scale from zero to 10, with 10 being the best, I would say the meeting was at a 12,’ Trump told reporters aboard Air Force One on his way back from South Korea. As far as not adding to the disruptions in global trade caused by Trump’s chaotic tariff policies, Trump’s assessment is probably correct. But on substance, it’s more like a five — at best — for the U.S.. Rather than coming away with a framework for resolving the fundamental differences between the two countries, the few details we have of the one-year truce struck on Thursday suggest a temporary stabilization of relations where China maintains significant leverage over the U.S. in one critical area. As my Bloomberg Opinion colleague Karishma Vaswani correctly predicted, Trump took his threat of 100 percent tariffs on Chinese goods off the table while Beijing agreed to delay export controls on so-called rare earths critical minerals for a year and revive purchases of U.S. soybeans. The soybean purchases are a bit of a sideshow. Treasury Secretary Scott Bessent said China has agreed to buy a minimum of 25 million tons annually for the next three years. China had all but stopped buying U.S. soybeans, turning instead to places such as Brazil and damaging American farmers who relied on the $12 billion the Asian nation pumped into their businesses last year alone. Alas, this is no major concession from China or a win for the Trump administration, as it basically restores what the nation had been buying from U.S. farmers. In the longer term, purchases of 25 million tons a year would be ‘basically getting back to normal,’ Brian Grete, a senior grain and livestock analyst at Commstock, told Bloomberg News. The main event was rare earths, which are among the most critical raw materials on the planet, deeply embedded in the technologies that underpin modern life. These minerals are used in everything from semiconductors and iPhones to MRI machines and cancer treatments. China has a near monopoly on rare earths, which the country has used as a bargaining chip in global trade and in responding to Trump’s tariffs. So important are these minerals that Trump earlier this year floated the idea of taking over Greenland to gain access to its potential supply of rare earths (which haven’t been proven).” HPS ANALYSIS: While this is an opinion piece, HPS believes it represents a growing body of opinion about the current U.S.–China trade truce and what it means over the next six months. Rare earth is the Gordian Knot that the administration can’t untie or cut, and President Xi knows it.

10 30 25: “Trump and Xi ease tension with truce on tariffs, rare earths.” Bloomberg: “Donald Trump and Xi Jinping agreed to extend a tariff truce, roll back export controls, and reduce other trade barriers in a landmark summit on Thursday, potentially stabilizing relations between the world’s biggest economies after months of turmoil. In the first sit-down between the leaders since Trump’s return to the White House, the pair agreed China would pause sweeping controls on rare-earth magnets in exchange for what Beijing said was a U.S. agreement to roll back an expansion of restrictions on Chinese companies. The U.S. will also halve fentanyl-related tariffs on Chinese goods, while Beijing resumes purchases of soybeans and other American agricultural products. The U.S. is also extending a pause on some of its so-called reciprocal tariffs on China ‘for an additional year,’ the Commerce Ministry in Beijing said in a statement, adding that China ‘will properly resolve issues related to TikTok with the U.S. side.’ Trump said he would visit China next April, with Xi planning to head to the U.S. afterward. ‘I guess, on the scale from zero to 10, with 10 being the best, I would say the meeting was at a 12,’ Trump told reporters on Air Force One, which he boarded immediately after the meeting with Xi in Busan, South Korea. ‘You know, just the whole relationship is very, very important. I think it was very good.’ Treasury Secretary Scott Bessent said the agreement was finished ‘in the middle of the night’ before the leaders met. ‘I expect that we will exchange signatures, possibly as soon as next week,’ he said of the deal, speaking on Fox Business. Xi emphasized that dialogue is better than confrontation, calling for more communication between the two sides and cooperation in areas such as trade, energy, and artificial intelligence, according to the official Xinhua News Agency. ‘Both teams should refine and finalize follow-up work as soon as possible, maintain and implement the consensus, and provide tangible results to reassure the economies of China, the U.S., and the world,’ Xinhua cited Xi as saying. U.S. stock futures were little changed as the New York trading day began, while China’s CSI 300 Index closed down 0.8 percent. The outcome is poised to resolve, at least for now, months of trade brinkmanship in which the U.S. and China threatened a series of levies and export controls on their products that had the potential to disrupt global supply chains and hurt the world economy. Still, it falls short of a comprehensive agreement that addresses issues at the heart of the U.S.-China economic competition … The rollback of the fentanyl tariff from 20 percent to 10 percent represents a significant victory for Beijing, which should now find its exports more competitive compared with rivals that have enjoyed relatively lower levies. Trump also will not push ahead with a threatened 100 percent increase in tariffs he had threatened ahead of the talks to impose starting next month. Trump expressed optimism that the Chinese would ramp up investments in the U.S. and consider additional extensions delaying implementation of their rare-earth policy … U.S. Trade Representative Jamieson Greer, speaking alongside Trump, said the U.S. would postpone action under Section 301 related to shipping and ports. Earlier this year, the U.S. announced port service fees on Chinese-owned vessels, with the Chinese retaliating later in the year. China also said it would suspend countermeasures against the U.S. for one year related to shipping.” HPS ANALYSIS: While there have been no formal announcements or informal pronouncements from the electric motor suppliers about production schedules and the availability of necessary components like magnets, HPS urges suppliers and bike shops to ask everyone in their supply chain to confirm product availability going forward, by month, through 2026. The postponement of the port service fees on Chinese-owned vessels has been put off for at least a year, pushing back on another added cost to the importation of bicycles, e-bikes, components, and accessories into the U.S. 

10 31 25: “For businesses caught between the U.S. and China, commerce is likely to be rocky for years to come.” Wall Street Journal Logistics Report: “As part of the trade-war truce reached by President Trump and Chinese leader Xi Jinping, the U.S. agreed to lower fentanyl-related duties on Chinese goods to 10 percent from 20 percent, bringing the average tariff rate on many products to around 47 percent from 57 percent, Trump said. That still leaves U.S. tariffs historically high, The Wall Street Journal’s Hannah Miao, Jon Emont, and Raffaele Huang write. While Beijing backed off on its latest harsh export controls on rare-earth minerals, it said nothing to alter the licensing regime it introduced in April. That means American auto, electronics, and defense companies wishing to import Chinese rare-earth magnets still must undergo the onerous process of securing government licenses, which can take many weeks and sometimes result in denials. Meanwhile, the U.S. is keeping a trade blacklist of Chinese companies that it says pose national-security risks, though it suspended for a year a rule announced in late September that would have expanded the blacklist to subsidiaries at least 50 percent owned by companies on the list.” HPS ANALYSIS: This says it like it is. The bicycle business is definitely “…caught between the U.S. and China” for at least the near-term, and the warning is clear that “…commerce is likely to be rocky” until new sourcing can be established going forward. The wild card that is yet to be played is the decision by the Supreme Court in the tariff case. As our readers will see below, the administration has already worked out a Plan B and C to replace the current reciprocal tariffs if it feels it is necessary. However, what we know about Plan B and C, as you will see, is messy at best, which means more uncertainty and confusion.   

10 31 25: “Trump touts rare-earth win in talks showing Xi’s strong hand.” Bloomberrg: “Donald Trump sounded triumphant afterwards. But in his first meeting with Chinese counterpart Xi Jinping since returning to office in January, the U.S. president had to give at least as much as he got. Trump declared the two leaders had ‘settled’ their differences on one of the thorniest issues, and a major source of Beijing’s leverage: access to China’s rare earths. ‘There’s no roadblock at all on rare earth,’ he said Thursday aboard Air Force One. ‘That will hopefully disappear from our vocabulary for a little while.’ What Trump chalked up as a win, for the global economy as well as the U.S., was China’s agreement to wait one year before implementing a sweeping regime of export controls for critical minerals that are crucial in all kinds of industries. But those new curbs are still in the pipeline, and older ones are still in place, meaning that companies in the U.S. and beyond will remain at Beijing’s mercy for key inputs needed to make fighter jets, semiconductors, and electric cars. Only a much more comprehensive deal between the world’s two biggest economies will likely remove that threat. What’s more, to get the Chinese pause, Trump had to offer a matching one. The U.S. agreed to postpone a proposed expansion of its export blacklist, which would have added thousands more Chinese companies. More than 24 hours after the leaders’ meeting, the White House still hasn’t released a fact sheet or written summary of what was agreed to. The Chinese commerce ministry put out a document on Thursday. U.S. Trade Representative Jamieson Greer acknowledged that the U.S. didn’t get the Chinese to budge on their existing controls and that the deal serves more as a continuation of an IOU Beijing has violated after previous rounds of talks. ‘We have some rare earth controls from earlier in the year on magnets, where we got to a decent flow, but now we expect them to flow even, even better,’ Greer told reporters at the White House Thursday. ‘We expect there to be more of a Chinese general approach.’ Still, U.S. officials were quick to tout the gains as a win for the world and global supply chains, brought about by Trump. China hawks are less impressed. ‘American policy since China’s April magnet controls looks like Germany’s long-term China policy: Both run by a few automakers which are dependent on China, yet get to dictate what the whole government does,’ said Derek Scissors, a China expert at the conservative American Enterprise Institute. ‘The American twist is that its automakers plus soybean farmers are dependent on China.’ It illustrated the far greater bargaining power that China enjoys in Trump’s second term. In effect, the U.S. has now accepted a negotiating link between its own curbs on high-tech exports, like AI chips, and China’s rare earth controls. To some Washington hawks, it’s crossing a risky line.” HPS ANALYSIS: This is probably overkill, but the point here is that China is only getting better at dealing with Trump and using its leverage. “Beijing drove a hard bargain, insisting on getting paid for every concession it made,” said Wendy Cutler, a former U.S. trade negotiator now at the Asia Society Policy Institute. “Trump has met his match with China, which has shown that two can play at this game.”

11 04 25: “Sustainability pulse check: industry and consumers not on the same track.” Bike Europe: “Is attention for sustainability in the cycling industry slowly declining? 75 percent of industry representatives say their company is taking a strategic approach to climate action, down from 80 percent last year. At the same time, 85 percent of the respondents report that reducing climate impacts is part of their product design and development. Over a third of companies have conducted at least one Life Cycle Assessment. This reflects a shift from isolated initiatives to integrating sustainability into core business practices. These are some of the key findings of the 2025 climate action pulse check for the cycling industry. While 95 percent of industry representatives see climate action as a priority, consumers often feel the industry isn’t acting accordingly. 70 percent have switched brands due to sustainability concerns. This year, 111 industry representatives from 106 organisations across 21 countries participated, alongside 206 cyclists from 17 countries. Remarkably, consumers emphasise longer-lasting, repairable, and compatible products, standardised parts, and circular design to reduce waste. They also call for transparency, responsible marketing, and collective action through policy and industry leadership. Supply chain is key enabler to scale climate action: The industry is still on a different track than consumers, as representatives report cutting emissions, regulatory compliance, and new product innovation as the top three benefits of their climate efforts. Engaging the supply chain is seen as the key enabler to scale climate action in the industry.” HPS ANALYSIS: In yet another indicator that the bicycle business, this time in Europe, is not on the same wavelength as its consumer base. It would be very interesting to compare primary consumer research done at the same time in Europe and North America. 

11 04 25: “The White House’s Plan A is winning its Supreme Court tariff case. It also has a Plan B.” Politico: “Aides have spent weeks strategizing how to reconstitute the president’s global tariff regime if the court rules that he exceeded his authority. The White House is exuding confidence heading into Wednesday’s Supreme Court hearing that the justices will uphold President Donald Trump’s sweeping tariff powers. But just in case, aides have a Plan B. Aides have spent weeks strategizing how to reconstitute the president’s global tariff regime if the court rules that he exceeded his authority. They’re ready to fall back on a patchwork of other trade statutes to keep pressure on U.S. trading partners and preserve billions in tariff revenue, according to six current and former White House officials and others familiar with the administration’s thinking, some of whom were granted anonymity to share details of private conversations. ‘They’re aware there are a number of different statutes they can use to recoup the tariff authority,’ said Everett Eissenstat, former deputy director of the White House’s National Economic Council during Trump’s first term. ‘There are a lot of tools there that they could go to make up that tariff revenue.’ The contingency planning underscores how much is at stake for Trump, who has used the International Emergency Economic Powers Act, a 1977 law designed for national emergencies, to impose tariffs on nearly every U.S. trading partner, the foundation of his second-term economic agenda. The justices will weigh whether the law gives the president broad power to impose economic restrictions, or whether Trump has stretched it beyond what Congress intended. If the court curtails that power, it could upend not only the White House’s America First trade strategy but also the global negotiations Trump has leveraged to shape.” HPS ANALYSIS: HPS falls in the school of economics that doesn’t find fault with trade deficits and is very, very concerned about the economic implications of tariffs on the U.S. and global economies. The American economy is entering an era that is unlike anything it has ever encountered or experienced before, and the North American bicycle business is demonstrating that it is disconnected from its consumer base as it is being taken on a Nantucket sleigh ride. Europe is struggling with a shooting war, a trade war, shifting politics, and the implications of nations going into debt. China is currently experiencing a deflationary cycle characterized by falling prices, weak consumer demand, and economic challenges, with the Consumer Price Index (CPI) showing a year-on-year decrease. As all this is churning, the Supreme Court has until June 2026 to hand down its decision on the tariff case. The Economist opined this week that the decision will be 9-0 against the administration. 

11 05 25: “Conservative justices sharply question Trump tariffs in high-stakes hearing.” British Broadcasting Corporation BBC: “Donald Trump's sweeping use of tariffs in the first nine months of his second term was sharply questioned during oral arguments before the Supreme Court on Wednesday. Chief Justice John Roberts and justices Amy Coney Barrett and Neil Gorsuch, three conservative jurists considered swing votes in this case, peppered U.S. Solicitor General John Sauer, representing the president's administration, during his more than 45 minutes before the court. They were joined by the court's three liberal justices, who also expressed scepticism about whether federal law and the U.S. Constitution give the president authority to unilaterally set tariff levels on foreign imports. ‘The justification is being used for power to impose tariffs on any product from any country in any amount, for any length of time,’ Roberts said. If the court ruled for Trump in this case, Gorsuch wondered: ‘What would prohibit Congress from just abdicating all responsibility to regulate foreign commerce?’ He added that he was struggling to find a reason to buy Sauer's arguments. The case centres around a 1977 law, the International Emergency Economic Powers Act (IEEPA), that Trump's lawyers have said gives the president the power to impose tariffs. Although the Constitution specifically vests Congress with tariff authority, Trump has claimed that the legislature delegated ‘emergency’ authority to him to bypass longer, established processes.” HPS ANALYSIS: Keeping in mind that two lower courts have found that the IEEPA tariffs are illegal, some very good legal minds have felt that the Supreme Court will arrive at the same conclusion. Those same legal minds opined that the questioning of the justices indicates a concurring decision. The Economist, as HPS has mentioned, opined that this will be a 9-0 decision, which HPS thinks may be too optimistic. The takeaway for everyone except the administration seems to be a concurring decision along the lines of 6-3. The Supreme Court has until June 2026, the end of the current term, to hand down its decision. However, there seem to be a lot of folks leaning toward a decision by January. If there is a concurring decision, the question of rebates to the entities that have paid tariffs will be paramount. This will be a mess to say the least, and NBDA has been advised that there simply will be no refunds. Also, the administration lawyers have already worked out a Plan B (and C) so other tariffs can be imposed to replace the IEEPA tariffs. However, the replacements all have rough edges that will cause more confusion and uncertainty, so a decision by the Supreme Court will, in reality, bring no real certainty or stabilization to the issue of import tariffs.

11 06 25: “Gorewear leaving the market in 2026.” Bicycle Retailer and Industry News: “Gorewear, the cycling and running apparel division of W. L. Gore & Associates, will leave the market next year, a source familiar with the company’s decision confirmed to BRAIN on Thursday. W.L. Gore, a privately held company with annual sales of about $5.3 billion, will remain an OE supplier of textiles, including Gore-Tex, to apparel brands in cycling and other segments. The materials science company does most of its business in the medical, electronics, automobile, aerospace, and other industries. It launched the Gorewear line in 1984 with a Gore-Tex cycling jacket. In 2015, it celebrated its 30 years in the market with a special ‘1984’ apparel collection. The brand began offering running apparel in 1997. In 2018, the company combined its Gore Running Wear and Gore Cycling Wear brands into the Gorewear brand. While Gorewear is operated independently of the company’s OE fabric business, it was sometimes described as a ‘roof of concept’ endeavor, bringing Gore's latest technologies to market.” HPS ANALYSIS: W.L. Gore is making a strategic move after 30 years of having its own brand in the global markets. Another sign of the uncertainty of the times? A $5.3 billion company is pulling into its core business. What does it see in the future?

11 07 25: “Giant Group revenue down 17% in first three quarters.” Bicycle Retailer and Industry News: “Giant Group’s net revenue through the first three quarters of its fiscal year was down 16.9% from last year, to NT$47.96 billion ($1.55 billion). The manufacturer said its gross margin for the period was 19.8% and net profit before tax was NT$1.43 billion. Net profit after tax was NT$910 million, and earnings per share were NT$2.31. Revenue in the third quarter was 24.9% down year-over-year, but gross margin for the quarter was up to 21.5%, compared to 18.5% in the quarter last year, an improvement the company said was ‘mainly driven by promotional efforts for own-brand products during peak season and inventory provision reversals from sales.’ Giant said its OEM business saw nearly 20% growth in sales during the first three quarters, supported by recovering demand in Europe. Sales of its own brands recovered somewhat in Europe. ‘While regional performance varied, the overall trend is stabilizing,’ the company said in a release Friday. ‘In the U.S., consumer sentiment remained cautious due to tariff policies and macroeconomic factors. In China, revenue declined due to a high base period last year. As the year-end holiday season approaches, the Group will continue to adjust market strategies flexibly to enhance sales performance.’ The company said e-bikes were 25% of its revenue for the first nine months of the year, a slight decline from the percentage last year.” HPS ANALYSIS: Giant Group is putting the best face a global public company can put on a very difficult year, with only confusion and uncertainty in the future. Giant Group is facing a deflationary cycle in China, declining consumer purchases in Europe, and a declining market and purchases in North America. Giant is a vertically integrated manufacturing company with an established OEM business and solid bicycle, e-bike, and fitness brands. HPS will be watching for more intel about Giant Groups planning for the near and mid-term future.

11 10 25: Rad Power announces 64 layoffs, report points to possible shutdown.” Bicycle Retailer and Industry News: “Rad Power Bikes told Washington state officials on Friday that it would lay off 64 employees in the state in January. Geekwire is reporting that a company letter to employees suggests the company could close if additional funding is not found. In its Worker Adjustment and Retraining Notification with the state, Rad said it will permanently close its facility in Seattle and terminate the 64 positions. The notice said the layoffs are not a result of relocation or contracting out the company's operations or the affected employees' positions. Geekwire cites a letter it says was sent to Rad employees. ‘For the past several months, executive leadership has explored different ways to continue Rad’s business, including strategic partnerships with other companies that could acquire the company or provide funding so the company could keep moving forward,’ the letter read in part, according to Geekwire. ‘Until recently, one such option seemed very promising and appeared to be likely to close. Unfortunately, that did not come to fruition. Leadership is still working to find other viable options to keep the Rad brand alive.’ The collective mantra has been and will continue to be, 'Save Rad.' After closing on several rounds of investments, including a $20 million investment in 2020, Rad Power has had several rounds of layoffs in recent years.” HPS ANALYSIS: HPS was shocked by this news. Rad Power has been acknowledged as the largest of the U.S.-based e-bike brands and companies. We understand that there is still some chance of an investor or VC coming forward, but the bell-lap has evidently started, and if funding isn’t found, the company will close after the first of the year. 

11 10 25: “Tariffs are hurting the people they’re meant to help.” Bloomberg: “The Editorial Board publishes the views of the editors across a range of national and global affairs. The recent trade truce struck between the U.S. and China is welcome news, but it will hardly erase the damage tariffs are still inflicting on American consumers and workers, including two groups who have strongly backed the president: farmers and factory workers. While it’s good news that China will resume purchases of U.S. soybeans, it has spent most of the year buying them from Brazil and other countries instead. Under the new agreement, China will import 12 million tons of U.S. soybeans this year, half of what it bought last year. In other words, the White House’s trade brinkmanship cut soybean farmers’ 2025 China trade in half. And they’re not the only ones to have suffered. A September survey found that two-thirds of corn farmers are more concerned about their finances than they were a year ago. The administration’s tariffs have driven up costs for fertilizer, equipment, and other farm essentials. At the same time, retaliatory duties and other policies have made it harder to sell their crops overseas. The math is plain: U.S. farmers are spending more and exporting less. As a result, auctions of farm machinery are up 15% this year. Farm bankruptcies have hit a five-year high. It’s not clear whether the administration will proceed with plans for a new agricultural bailout, but farmers are businesspeople. They want to compete for customers, not depend on government handouts. And they elect politicians to expand their opportunities, not contract them. Meanwhile, there are about 40,000 fewer manufacturing jobs today than when the president announced his ‘Liberation Day’ duties back in April. While some of those losses no doubt resulted from automation and other long-term economic trends, others have clearly been driven by the higher input costs imposed by tariffs. The hundreds of billions of dollars in investment pledges the administration has won during bilateral negotiations with countries such as Japan and South Korea may one day lead to more factories being built in the U.S.. But those facilities are likely to be heavily automated and, in any case, won’t arrive soon enough to offset the job losses currently depressing the manufacturing sector.” HPS ANALYSIS: The Townley family motto is: “Hold To The Truth!” This article is just that, holding to the truth. Tariffs, no matter how you frame them, are paid by consumers. HPS understands that there are those who continue to support tariffs, who are being hurt by them. Some of those being hurt are aware and are willing to take a hit so they believe others down the road can benefit. Some of those being hurt are aware and have successfully brought suit against the government and won, and their case is now being appealed by the government to the Supreme Court. And there are those who are being hurt and will be hurt more, like bike shop owners and their suppliers and customers, who are facing higher prices and availability issues, and who have so far not had their voices heard. HPS’ advice is to develop and execute a Survive business plan that leads to a Thrive business plan, and support the NBDA so you have a voice.  

11 11 25: “Resale momentum builds as consumers seek value.” SGB Media: “Several recent reports from the Boston Consulting Group (BCG), ThredUp, and The RealReal, show that the shift toward resale has accelerated as consumers prioritize affordability. A report by BCG and Vestiaire Collective, based on a survey of 7,800 consumers from the Vestiaire Collective community, released in early October, found that the secondhand fashion and luxury market has grown three times faster than the firsthand market. Growing at a rate of 10 percent annually, the global resale market is expected to reach up to $360 billion by 2030, up from its current range of $210 billion to $220 billion. Resale accounts for 28 percent of the wardrobes from those surveyed, up from 25 percent in 2022 and 21 percent in 2020. Among categories, resale accounted for 30 percent of clothing purchases and 40 percent of handbag purchases. More than half of those (55 percent) occurred through online multi-brand resale platforms such as Vestiaire Collective. Affordability is at the core of secondhand fashion and luxury shopping, cited by 78 percent of surveyed respondents. BCG wrote, ‘For some, secondhand is a smart trade-up strategy, a way to access higher-end or luxury brands that would be out of reach if bought new. Over half of respondents said they prefer buying premium labels secondhand rather than settling for more affordable, firsthand alternatives. It’s how they can afford the brands they aspire to own. For others, secondhand is simply a cost-saving tactic, a way to spend less. Nearly half said they buy secondhand specifically to avoid paying full price for items they want.’ BCG states in its report, ‘All major motivations are seeing higher agreement levels than in previous years, signaling a more mature and deeply embedded secondhand behavior.’” HPS ANALYSIS: HPS has promoted the circular economy, a.k.a. the resale economy, to bike shops for years now, and it has become more relevant as the overall market has evolved and changed. Previously-owned bicycles and e-bikes are a growing product segment for bike shops and a key chapter in the Survive and Thrive Playbook. 

11 13 25: “The hidden risks in Taiwan’s boom.” The Economist: “Taiwan is envied for its exporting prowess. It is home to all of the world’s cutting-edge chipmaking. Just as extraordinary, but much less appreciated, is its towering current-account surplus, the result not just of a trade boom but of a long-undervalued currency. This aided Taiwan’s export-led rise, but it has long outlived its purpose. While manufacturers have been coddled, ordinary Taiwanese consumers have been deprived of the fruits of growth, and financial risks are building up. It is time for Taiwan to loosen its grip on its currency. Taiwan’s vast surpluses have been years in the making. For decades, its central bank, known as the CBC, has kept the currency undervalued, giving manufacturing exporters a competitive boost. According to the GDP-adjusted Big Mac index, our measure of how far exchange rates depart from their underlying values, the Taiwan dollar is 55% undervalued against the American dollar, the most in the world. As a consequence, in this century Taiwan has run the world’s biggest current-account surplus as a share of output, once entrepots and petrostates are excluded. And lately, thanks to the artificial-intelligence boom, Taiwan’s imbalances have gone into overdrive. In October, its goods-trade surplus hit a record high of 31% of GDP in annualised terms—a quadrupling since the pandemic. According to the latest data for this year, Taiwan’s current-account surplus has reached 16% of GDP. By comparison, China, the archetypal surplus economy, is running a current-account surplus of just 3%.” HPS ANALYSIS: As HPS has already noted, back in the day, Schwinn (the original company) dealt with the New Taiwanese Dollar (NT) undervalued against the U.S. dollar as an advantage, although we never had a 55% undervaluation. The solutions that are available to the Taiwanese government are complex, but the point here is that the Taiwanese supply chain has been able to use this undervaluation to soften the financial impact of U.S. tariffs.

Contact Jay Townley: jay@humanpoweredsolutions.com