TARIFFS UP, TARIFFS DOWN, WHAT’S THE IMPACT?

By Jay Townley

04 29 25: “Kent halts Chinese imports; tariffs could force production suspension.” Bicycle Retailer and Industry News: Kent International would likely suspend production at its South Carolina bike factory later this year if the Trump administration does not reduce tariffs on Chinese imports, Kent chairman Arnold Kamler said. Kent, which dates to 1907, is one of the largest suppliers to the U.S. mass market. Since 2014, its BCA factory in Manning, South Carolina, has supplemented its imports from China and Southeast Asia. The factory, which employs about 100, relies on frames and components from China and elsewhere, and has produced more than 1.5 million bikes. Kamler told Fox Business News on April 18 that Kent had stopped imports of bikes and bike parts from China due to tariffs and duties he said total about 175 percent. He told BRAIN on Monday that the import stoppage would eventually affect the South Carolina factory. ‘If there are no changes in China tariffs in the next 30 days, we will need to suspend production later this year,’ he said. The factory has been featured in many reports in the mainstream media as an example of domestic manufacturing. However, Kamler has been outspoken for years, saying that tariffs on Chinese component imports discourage U.S. manufacturing. While Kent had planned to begin manufacturing frames and other components there, it currently paints and assembles bikes and builds wheels. Kamler said while Kent and other suppliers hustle to diversify their supply chain, the current tariffs on Chinese imports would result in prices that Kent’s retailer customers will not pay. ‘Unless something happens fast in China, there are going to be empty shelves everywhere, not just for bicycles,’ he said. He said the administration’s changeable trade policy has forced Kent to present customers with multiple pricing scenarios. ‘We are presenting all our customers with quotes for if the tariff is 24 percent, 175 percent, or zero,’ he said. ‘It’s a never-ending nightmare.’” HPS ANALYSIS: As this article states, Bicycle Corporation of America’s facility in South Carolina is the largest bicycle assembly factory in the U.S., with a production capacity well over the number of units it has been shipping annually. All of BCA’s production output is for Walmart. BCA is an assembly factory because it does not manufacture frames or forks, which it imports from China. Arnold Kamler has made it clear in the past that he will install the equipment to fabricate frames and forks when U.S. tariffs on Chinese component parts no longer discourage U.S. manufacturing. As I have reported in previous issues of this newsletter, Arnold Kamler has repeatedly told two presidents and their administrations that bicycle manufacturing will not be viable in the U.S. until the federal government and the Congress eliminate the import tariffs on the component parts required to manufacture bicycles and e-bikes, and offer tax and investment incentives to attract the foreign companies that will need to invest in U.S. factories to make it happen.   

04 30 25: “CPSC votes to advance e-bike, lithium-ion battery testing proposal.” Bicycle Retailer and Industry News: “The Consumer Product Safety Commission voted 3-2 Wednesday to advance its proposed e-mobility device and lithium-ion battery testing standards to the 60-day public comment period required under the Notice of Public Rulemaking guidelines. The proposal to require e-bikes and other e-mobility devices to meet modified UL testing standards, while not also recognizing European standards that some brands use, will be published in the Federal Register in a few days, according to the commission, at which time public comments can be submitted. Depending on the comments received, promulgation could be delayed before advancing to a congressional vote to become federal law. ‘Ticking time bombs. I mean, that's what we're dealing with here, right?,’ said CPSC commissioner Richard L. Trumka Jr. as part of his opening statement. ‘It's lithium-ion batteries and e-bikes, e-scooters, and hover boards can be ticking time bombs, and it's leaving people across the country on edge.’ The best way to defuse the threat stirred some debate during the meeting. While acknowledging safety and keeping unregulated batteries from entering the country from overseas are priorities. Acting chairman Peter A. Feldman introduced a motion to submit the proposal to the Office of Information and Regulatory Affairs. ‘Doing so would ensure compliance with the new interagency review process to allow CPSC the benefit of the views of other executive agencies, and further ensure that the federal government speaks with one voice on complex policy matters like the one before us today,’ Feldman said. Commissioner Douglas Dziak agreed and voted for the motion. Feldman added that colleagues who voted for the proposal but against his motion, Trumka, and commissioners Alexander Hoehn-Saric and Mary T. Boyle, were upset with the executive order by President Trump, including the formal interagency review process coordinated through the Office of Information and Regulatory Affairs (OIRA).” HPS ANALYSIS: This is a well-written article that HPS recommends you read and make a copy for your files. The political back-and-forth is unfortunate in that this mandatory federal regulation is urgently needed to provide the complete and thoroughly testing criteria for mid-size lithium-ion batteries for use with micromobility devices. As was pointed out during the subject hearing, lives are being lost every year that this mandatory regulation isn’t promulgated. There are also two pieces of non-partisan legislation, one in the House and one in the Senate, that seek to require CPSC to promulgate as a mandatory federal safety regulation the same UL 2849, UL 2271 and UL 2272 voluntary standards that the commission is relying on, with slight modifications, in its proposed mandatory regulation. Both of these bills are progressing out of their respective committees with unanimous support, and HPS has been advised that they will be merged and will be passed as one joint bill and sent to the President for signature into law, before CPSC will be able to promulgate its recently passed regulation. The effect will be almost the same in that UL 2849, UL 2271, and UL 2272 will become mandatory product safety regulations. CPSC and both the House and Senate Committees have rejected mention of the European EN standards.

05 01 25: “McDonald's sales drop as diners face ‘uncertainty.’ BBC News: “McDonald's has suffered its biggest drop in US sales since the height of Covid, a fall that it said was driven by people's concerns over the U.S. economy. Despite a marketing tie-in with the Minecraft movie and extended price deals, U.S. customers made fewer visits to the burger chain in the first three months of this year, compared to a year ago. Chief executive Chris Kempczinski said customers were ‘grappling with uncertainty.’ But he assured investors that the firm could ‘navigate even the toughest of market conditions.’ McDonald's has been working for months to try to reignite enthusiasm among customers, after facing a backlash over rising prices, especially lower lower-income households. However, revenue at U.S. McDonald's outlets that have been open at least a year sank 3.6 percent in the first three months of 2025 compared to a year earlier. That is the steepest decline in like-for-like sales in the U.S. since the three months to the end of June 2020, when pandemic restrictions were in place. The surprise drop in sales coincided with a contraction in the U.S. economy, which shrank at an annual rate of 0.3 percent in the first three months of 2025, the first quarterly decline in output since 2022.” HPS ANALYSIS: The American consumer is “grappling with uncertainty.” Cutting back on fast-food meals and carefully watching discretionary spending are both very real reactions for a growing number of consumers, including young people still in high school, to the chaos around them. McDonald’s is a global fast-food brand that gets direct consumer reaction to the quality of food and service, and more importantly, pricing. When I went to work for Arnold, Schwinn & Company in 1966, the brand-new sales school where I worked was carefully studying the McDonald’s customer service and employee training program, which was located in a suburb of Chicago. McDonald’s is now a bellwether, a window into the mind of the global consumer, who isn’t reacting well to pricing that they don’t perceive as delivering quality and value. They may also be a “canary in the coal mine,” forewarning about consumer reaction to chaos and uncertainty.

05 02 25: “Employers added 177,000 jobs in April, a solid showing amid tariff uncertainty.” The Washington Post: “The U.S. labor market remained resilient in April, with employers adding 177,000 jobs, a solid showing despite ongoing economic uncertainty that has caused many employers to put hiring plans on hold. The unemployment rate held steady at 4.2 percent, near historic lows, according to a jobs report released Friday by the Labor Department. Economists had largely expected growth to cool, following the addition of 185,000 jobs in March, figures that were revised downward. The labor market has been a pillar of strength for years, helping to prop up the economy through a period of high inflation and elevated interest rates. Economists have been on high alert that surrounding weakness, including data this week showing the U.S. economy shrank in the first three months of 2025, could drag down the labor market. But, so far, the slowdown has been gradual. ‘Today’s report is a welcome surprise,’ Ger Doyle, U.S. manager at ManpowerGroup, wrote in an email. ‘Overall, the labor market is not in crisis but at a crossroads.’ Employers continued to add key services jobs in April, with gains in health care, transportation and warehousing, financial activities, and social assistance leading the way. Federal government employment declined for the third straight month, reflecting ongoing layoffs and firings by the Trump administration. The retail industry also lost jobs in April, as uncertainty over new tariffs led many consumers and businesses to rethink their plans. Americans are spending more cautiously, by cutting back on travel and dining out, while many employers are loading up on equipment but pausing hiring and expansion plans.” HPS ANALYSIS: Last month, HPS stated that there are three KPI’s that we watch closely: GDP, consumer confidence, and jobs. The jobs report for April was solid, with 177,000 new jobs reported and unemployment steady at 4.2 percent, near historic lows. The jobs report offset a decline in GDP and the low consumer confidence. HPS describes elsewhere in this month’s newsletter the negative ripple effect on employment of the greatly reduced ocean freight from China as a result of the tariffs. The jobs report is for April, and the reductions in the U.S. workforce will continue to ripple through the May labor report. Stay tuned.

05 05 25: “Cold play: Toy industry faces ‘devastating’ impact from tariffs.” RETAILDIVE: “Around 96 percent of American toy companies are small- and medium-sized businesses. Nearly half of them could shutter due to U.S. tariff policies. Isaac Larian was planning on expanding his toy factory in Hudson, Ohio. Now, not only is the project to add another 22,000 square feet to the space on hold, but the entire trajectory of his company is on the precipice of change. ‘Frankly if these tariffs do not go away, we have no choice but to do layoffs,’ he said. As the CEO of the largest privately-held toy manufacturer in the United States, his company, MGA Entertainment, has over 2,200 employees and sports some of the most recognizable labels on store shelves, including Bratz, L.O.L Surprise, and Little Tikes. During peak season, the factory, which has been in production for over six decades, has 700 workers. The Trump administration’s trade war is currently hyper-focused on China, which produces a large swath of goods for the United States. Some product segments are more dependent on the country than others, but the toy industry in particular is bracing for maximum impact. That’s because nearly 80 percent of toys imported into the United States come from China. And President Donald Trump is seemingly not concerned with the potential impact on the sector. ‘Well, maybe the children will have two dolls instead of 30 dolls. And maybe the two dolls will cost a couple of bucks more than they would normally,’ he said on Wednesday. Going back to the start of April, toy companies were preparing for a universal baseline tariff of 10 percent. ‘At that point, companies were thinking through the best way to respond. I think our industry, like many others, was figuring out a way between all points of the supply chain, from factories … to the retail partners of how might we deal with a 10 percent tariff and not have it impact the consumer,’ Greg Ahearn, president and CEO of The Toy Association, said. But then came a series of decisions by the administration that increased, then temporarily backed off, most global tariffs. However, last month the U.S. raised duties on imports from China to 125 percent, which stacked on two previous hikes, for a total rate of 145 percent. It changed everything. Toys in general have low price points, with over two-thirds of products coming in under $25. That has protected the category during past economic downturns, according to a UBS note led by analyst Arpine Kocharyan. ‘Cutting back on higher-ticket entertainment spend (e.g., visit to Disneyland) can often result in replacing more expensive activities with cheaper in-home entertainment options, such as toys,’ UBS wrote. But the introduction of such high tariffs will push many companies to pass the cost off to consumers. ‘I don’t think anyone expected the process that we are going through,’ Ahearn said. ‘The cost of those goods is going to skyrocket.’ Fun, it seems, is about to get more expensive.” HPS ANALYSIS: There was a time not too long ago when the American bicycle business was joined to the toy business. The majority of bicycle brands had a permanent display room at the Toy Center in New York City, and exhibited at the Toy Fair in March. The primary connection was so-called sidewalk bicycles, 16-inch wheel and smaller, down to 10-12-inch wheels. Before 2015 or so, sidewalk bicycles were not included in either supply or sell-through data. The Toy Fair in March was also one of the big social events in the domestic bicycle manufacturing industry that had between six to nine members and dozens of component manufacturers, most of whom had second and third generation owners and managers. The formal and informal social events were held at the Plaza Hotel during the Toy Fair. My point is that a portion of the bicycle industry was an active player in the toy business, and to read that half of the remaining toy brands and manufacturers could be forced out of business by the current tariff situation is, as the title of this article says, “devastating” to say the least, for us old-timers. This article also hits home in that it probably represents what we have not yet heard about from the American bicycle business. 

05 06 25: “World’s trade superhighway feels strain from U.S.-China decoupling.” Bloomberg: “Container liners are starting to sever shipping routes that link the U.S. and China across the Pacific, as President Donald Trump’s trade war upends the industry and forces the two largest economies apart. Among signs of disruption are plunging fees, fewer services, and a pall of uncertainty over what for decades has been one of the main maritime highways of the global economy, carrying manufactured goods and vital commodities. German container shipping group Hapag-Lloyd AG has canceled 30 percent of China-to-U.S.-bound shipments, according to a spokesperson. Separately, Swiss liner Kuehne + Nagel International AG said some trades had stopped completely, while it expected a 25 percent to 30 percent drop in bookings from China to the U.S., Chief Executive Officer Stefan Paul told investors on a conference call. The Trump administration’s globe-spanning trade war, that’s dominated the president’s opening months in office, has trained its harshest measures against China, with the imposition of U.S. import levies totaling 145 percent, and similar punitive retaliatory measures from Beijing. While there have been carve-outs for some goods, the dispute has roiled the shipping industry. Although Trump and other senior officials have talked up the chances of a potential deal with China, and negotiations will take place in Switzerland later this week, any resolution of the dispute may take months to hammer out. In the meantime, executives in China are turning away from the U.S. market. As a result, fees are plunging. The cost of shipping a 40-foot box from Shanghai to Los Angeles, port nodes on either side of the Pacific, hit its lowest since 2023 in late March, according to the data from Drewry Shipping Consultants, a maritime advisory firm. A tally of rates across global routes has also softened. ‘It’s a trade lane on what is a global highway,’ said Joe Kramek, chief executive officer at the World Shipping Council, whose members operate 90 percent of global liner capacity. ‘So it does have ripple effects all the way across.’ Shippers are also contending with U.S. measures beyond the barrage of levies, adding a further layer of complications. These include the ending of a tax exemption for small shipments, as well as a potentially disruptive plan to charge hefty fees on large Chinese ships calling at American ports. ‘There’s uncertainty about what will happen to cargo flows in and out of the U.S.,’ said Niels Rasmussen, chief shipping analyst at trade group Bimco. In contrast, there’s no policy uncertainty in trades elsewhere, so shipowners can approach these normally, he said.” HPS ANALYSIS: A 25 percent to 30 percent drop in the number of sailings from Chinese ports to U.S. ports also means the dockworkers needed to unload container ships is reduced by 25 percent to 30 percent, as are the number of trucks and truck drivers required to transport the containers to warehouse and freight yards, where fewer railyard workers and freight trains and train crews are required to move the containers and freight in inland warehouses and customers. The ripple effect of the current reduction of orders placed from U.S. customers to Chinese original equipment manufacturers (OEMs) is having a negative effect on the whole supply chain, from mainland China to Lyndon Station, Wisconsin. For bike shops, this means that brands and suppliers have brought in orders ahead of the tariffs becoming effective, and the first container ships loaded with cargo that was subject to the new, higher tariffs left Chinese ports of embarkation in early April and arrived in the port of Los Angeles in late April. The surge in import shipments was received in warehouses in February and March. We are now in that dwell period from early May until either the warehouse stock of pre-tariff inventory is depleted, or there is some type of easing or suspension of all or a part of the import tariffs. If this doesn’t happen before warehouse stock is depleted, there will be shortages and empty show floors and shelves. HPS projects this to start occurring with stock-outs in late June to July. If there is an easing or suspension in whole or part of the import tariff’s, it could take 90 to 120 days from the date this is confirmed for new orders to flow through the supply chain and deliver inventory availability to bike shops. This is because the world trade super-highway will have to be kick-started almost from scratch after being forced to wind down. If the trade negotiations between the U.S. and China yield a quick result that is satisfactory to both countries, the restart will be smoother and finished goods will begin to flow through the supply chain earlier, perhaps by August or early fall 2025. In either case, the current disruption in the supply chain is similar in its negative impact to the pandemic, and will grow worse over time until satisfactory trade negotiations are signed off on.

05 06 25: “Park Tool shares free 3D-printing files for pegboard tool holders.” Bicycle Retailer and Industry News: “Park Tool is releasing seven 3D-printing models allowing anyone to print out custom pegboard holders for some of its tools. The printing files are available for download at parktool.com under a Creative Commons BY-NC-SA 4.0 license, meaning users can share or modify these files under specific circumstances. The company said the project is analagous to the free bike repair information shared through its YouTube channel. ‘Now, tool walls all over the world can adorn custom tool holders for many of Park Tool's most popular products. All are optimized for standard American pegboard (9/32" holes spaced 1" apart), but can be freely modified or adapted to fit the end user's needs,’ the company said. ‘If you don't own a 3D printer, these files can be sent to services such as Craftcloud, i.materialise, Print a Thing, and Shapeways.’” HPS ANALYSIS: We think this is brilliant in several ways. First, Park Tool has launched a marketing campaign that is going to attract the attention of bike shops and mechanics large and small. And it is a high-tech campaign, with international reach and delivery, executed at a low cost. Our congratulations to the marketing manager at Park Tool. Second, Park Tool is highlighting 3D printing, a mature technology that holds the promise, as HPS has said in previous newsletters, of making every bike shop in America a bicycle and parts and accessory “manufacturer.” Park Tool is showing the way by providing the digital files required to 3D print a selection of custom pegboard holders for some of its tools in-house. HPS believes that frames and forks are next, followed by complete bicycles. We will talk more about this at the NBDA Retailer Summit in Bentonville, Ark., May 20-22. Looking forward to seeing you there.

05 07 25: “U.S. and Chinese officials will meet in Geneva in first sign of thaw in trade war.” National Public Radio npr: “U.S. and Chinese officials have announced they will meet in Switzerland later this week, signaling a possible détente in the escalating trade war between the global superpowers. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will meet Beijing's lead economic representative, He Lifeng, potentially paving the way for broader trade talks. In an appearance on Fox News, Bessent said the current tariffs aren't sustainable and are ‘the equivalent of an embargo. We don't want to decouple. What we want is fair trade,’ he said. The U.S. and China have been locked in a tit-for-tat trade war, with both sides imposing hefty, triple-digit tariffs on each other's goods, making trade between the world's two largest economies near impossible. Investors and global policymakers will be looking for any signs of an off-ramp, as the ongoing trade war threatens a global recession. China and the U.S. ‘need to move on,’ said Alicia Garcia-Herrero, chief economist for the Asia Pacific at French bank Natixis. ‘I think both parties are keen to negotiate.’" HPS ANALYSIS: As of May 7, Chinese-produced bicycles imported into the U.S. pay a tariff of 145 percent plus the original M.F.N. and the Section 301 and National Security punitive tariffs, totaling as high as 195.5 percent for road, 201.0 percent for all other bicycles, and 190.0 percent for e-bikes. The first container ships from China, loaded with bicycles and e-bikes subject to these tariffs, left China in early April and arrived at the port of Los Angeles in late April. As has been reported, importers of record have cancelled orders at the Chinese original equipment manufacturing plants (OEMs) until there is some clarity or resolution to this trade dispute. They will rely on inventory rushed into their U.S. warehouses to fill orders, and hope that the dispute is resolved before they run out of pre-tariff inventory. Initial price increases have already been announced, and some smaller brands have either withdrawn from the U.S. market, suspended operations, or closed their doors. Most bike shops have inventory, or access to supplier inventory. That might sustain them through most of the high-selling season of the second quarter, depending on retail demand. Consumers are being advised to buy now, because bicycle and e-bike prices are going to increase, and there may be a shortage if the trade dispute drags out. The chaos-induced uncertainty makes it very difficult to offer predictions of what the short-term probabilities are. With this said, HPS feels that the talks in Switzerland are the first concrete sign of a potential thaw in the deadlock. We currently see two probable scenarios emerging. The first is that the U.S. agrees to a trade deal quickly, with the U.S. removing the steep reciprocal tariffs but keeping 20 percent duties on Chinese goods. The question for the bicycle business is the status of Section 301 and National Security punitive tariffs that total 45 percent. While welcomed, a quick deal will have many unanswered questions and more loose ends that will take months to resolve. And there is always the added risk that the President will negate the negotiated deal and interject his own. Meanwhile, bike shops will face uneven and fluctuating supply with waves of price changes both up and down. The second probable scenario is long, drawn-out negotiations that will go on for months. Bike shops will face price increases and growing chaos in the form of a fluctuating and unreliable supply chain that will demand good and flexible business planning and innovative cooperation with reliable, long-term partners.

05 07 25: “Xi fortifies China’s economy before first talks on trade with U.S.” Bloomberg News: “President Xi Jinping’s government provided a jolt to China’s economy ahead of landmark trade talks with the U.S., with officials unveiling a range of policies designed to strengthen Beijing’s hand in negotiations. Hours after confirming Vice Premier He Lifeng will travel to the famously neutral nation of Switzerland for meetings this weekend with US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, some of China’s top economic officials announced sweeping measures to stabilize markets, boost tech innovation, and protect small businesses. At a snap briefing in Beijing on Wednesday, central bank Governor Pan Gongsheng announced across-the-board rate cuts alongside other steps that could pump 2.1 trillion yuan ($291 billion) into the economy. That marked the most significant dose of easing by China since Donald Trump’s ‘reciprocal’ tariffs unleashed a trade war that’s upending the global economic order and disrupting markets. Both sides will enter the weekend negotiations starting Saturday projecting confidence that they hold the upper hand. Trump said in a recent interview with NBC that ‘China’s getting killed right now,’ while Bessent has called his nation’s 145 percent tariff ‘unsustainable’ for export-dependent China. For its part, Beijing has framed the talks as being initiated by the U.S. while repeatedly saying it would be unafraid to ‘fight to the end’ if necessary. Either way, both the U.S. and China have an incentive to at least talk about reducing tariffs after a weekslong standoff that risks severing trade links between the world’s biggest economies. While it’s unclear what concessions both countries could bring to what Goldman Sachs Group Inc. has branded ‘ice-breaker’ talks, the fact that high-level negotiations are taking place generated optimism that lifted equities in China and provided a boost to US equity-index futures.” HPS ANALYSIS: There are two distinctly different culturally rooted styles of negotiating going into the meeting between the US and the PRC in Switzerland this Saturday. There’s the American style, that I personally had to unlearn quickly when I was a member of the Schwinn Bicycle Company negotiating team sitting across the table from Tony Lo and the negotiating team representing Giant Manufacturing Company. The typical hard-edged, pushy, overly aggressive American negotiating style is considered rude by Asians. I learned from Al Fritz, former Schwinn Bicycle Company executive vice president, a master at high-level and complex negotiation, and at making friends and winning real trust. Jamieson Greer, the USTR, is an experienced international trade negotiator, and Secretary Bessent has a solid reputation as a negotiator, although not in international trade. Vice Premier He Lifeng also lacks international trade negotiating experience, but he clearly has President Xi Jinping’s support. The American negotiators, in all probability, will be in a hurry to make a deal, knowing the substantial concerns about the national and global economies. The vice premier probably won’t be in a hurry, but will be more confident that his president will support the deal he negotiates. Looking at the two probable scenarios HPS is currently advancing, they both have the additional risk of being rejected or substantially modified by the president of the U.S..

05 07 25: “ZIV launches expansion of market data service.” Bicycle Retailer and Industry News BRAIN: “The ZIV – German Bicycle Industry is expanding its market data offerings and initiating development of a comprehensive market data service for the entire German bicycle industry. The new service will provide in-depth, up-to-date point-of-sale data, enabling both retailers and the bicycle industry with a better overview of bicycle, e-bike, and accessory sales in the future. The ZIV moreover expects to gain greater insights into the economic processes within retail and the industry, which it can then use for its political work. The development of the ZIV market data service is part of the project MDS International, co-funded by EIT Urban Mobility, an initiative of the European Institute of Innovation & Technology (EIT), a body of the European Union. The project forms part of EIT Urban Mobility's mission to foster a competitive and sustainable European bicycle industry. Better market insights for the industry: The ZIV has been publishing market data on the German bicycle industry for over 50 years now. ‘Our ZIV market data means we have very good information up until goods are delivered to the retailers. The data on what happens afterwards in shops is often inaccurate, however. Better insights are important for the entire industry to be able to plan production and sales in line with demand,’ says Katharina Hinse, head of economic & industrial policy at the ZIV. With the Bicycle Association (BA) of Great Britain, the association has gained a partner with a wealth of experience: The BA has successfully operated a Market Data Service (MDS) for more than five years now, providing detailed sales figures for the UK bicycle market. Competitive advantages for retail and industry: ‘We're taking the BA's MDS as our model and applying it to the German market in close collaboration with our British colleagues, allowing us to complement our existing service with a focus on retail,’ explains Burkhard Stork, CEO at the ZIV. The first retailers have already expressed an interest in cooperating with the ZIV. retailers, who contribute anonymous sales data, are able to access the data dashboard for free and to compare their own data with the data for the market as a whole. This should bring considerable competitive advantages. In the future, ZIV member companies will be granted access to the anonymised, aggregated data based on a cost-covering subscription model. ‘With this project, we're addressing a long-standing wish within the industry for more data insights,’ tells Katharina Hinse. ‘We want to offer the entire industry a comprehensive solution that benefits both retailers and manufacturers,’ adds Burkhard Stork.” HPS ANALYSIS: Germany is the largest bicycle/e-bike consumer market in the EU, and it has made a significant decision to launch a comprehensive market data service for the entire German bicycle industry, enabling both retailers and the bicycle industry with a better overview of bicycle, e-bike, and accessory sales in the future. HPS has long advocated for a similar program for American retailers and suppliers. The ZIV program proves it can be done to the benefit of the whole German bicycle business that also is home to the world’s largest bicycle dealer cooperative, ZEG. The NBDA has reached out to Sports Market Surveys, one of the international research companies involved in the ZIV project, and contacted the American bicycle industry association several years ago about collaboration that was interrupted by the pandemic. Given the current chaos in the American bicycle business, HPS opines that now is the time for such a retailer-led data collection and reporting initiative in the U.S..

05 09 25: “Trump fires all 3 Democrats on the Consumer Product Safety Commission.” National Public Radio NPR: “The Democratic members of an independent agency dedicated to protecting Americans from dangerous products and issuing recalls and safety warnings were fired by President Trump via an overnight email. It's the latest instance of Trump seeking to replace high-ranking officials at independent federal agencies — efforts that have drawn legal challenges. The firings at the Consumer Product Safety Commission (CPSC) come as consumer protection groups and lawmakers warn that Trump may be attempting to dismantle the entire agency. Congressional Democrats and Sen. Bernie Sanders, an independent from Vermont, issued a letter Friday condemning purported plans by Office of Management and Budget Director Russell Vought to eliminate the agency and to absorb its functions and staff into what the lawmakers describe as a ‘currently nonexistent staff division within the Department of Health and Human Services.’ It's unclear if the Trump administration would pursue such a plan.” HPS ANALYSIS: After voting 3 to 2 on April 30 to publish a proposed mandatory lithium-ion battery safety regulation for micromobility devices for a comment period prior to final promulgation, the President stepped in and upended and stopped the regulatory process. On April 30, it finally looked like the Consumer Product Safety Commission was about to bring the regulatory power of the Consumer Product Safety Act to one of the worst public safety problems the American bicycle business has every faced, when suddenly the federal regulatory process mandated by an act of Congress, and which has served to protect Americans for decades, was stopped by the legally questionable act of the President. The Congress has two bills, one in the House and one in the Senate, that will require CPSC to do what it essentially did on April 30. Both bills are bipartisan, and both have received unanimous support from both political parties in their respective committees, and both are expected to pass unanimously in their respective chambers. This means legislation will be placed on the President’s desk for signature that will require what CPSC voted in favor of April 30. We will see whether the President will sign or veto, but the delay puts Americans’ lives at risk, and fails to properly deal with and resolve the bicycle businesses’ most highly visible product safety problem. 

05 12 25: “Surprise U.S.- China trade deal gives global economy reprieve.” The Wall Street Journal WSJ: “Tariff reductions are bigger than expected, and Bessent says ‘neither side wants to decouple.’ The U.S. and China have agreed on substantial tariff cuts following a weekend of trade talks in Geneva, slashing levies imposed on each other down to 10 percent. A few days ago, it would have seemed almost impossible. But on Monday, to the surprise of global investors and everyday businesses fearing a trade war, the U.S. and China agreed to a truce. The world’s two biggest economies unwound for now most of the tariffs they had imposed on each other since April in a tit-for-tat battle that was threatening to stoke U.S. inflation, crash China’s export engine, and upend the global economy. Stock markets in the U.S. and elsewhere surged on the news. The dollar and bond yields rose, reflecting expectations of faster U.S. growth as trade tensions recede. Exporters breathed a sigh of relief. Investors and analysts said the outcome was much better for the global economy than they had expected on Saturday when U.S. and Chinese negotiators started two days of intensive talks at the Geneva residence of the Swiss ambassador to the United Nations. The U.S. agreed to lower the base level of tariffs on most Chinese goods to 30 percent, from 145 percent, while China said it would cut its levies on U.S. products to 10 percent from 125 percent. The 30 percent rate imposed by the U.S. includes a levy related to China’s alleged role in the fentanyl crisis plaguing the U.S., an issue in the weekend’s talks. The U.S. tariff on many Chinese products will be higher than 30 percent. U.S. duties on steel, aluminum, and autos remain in place, as do some earlier tariffs on certain Chinese goods imposed during President Trump’s first term in office and that of former President Joe Biden. Washington and Beijing agreed to keep the new tariff levels in place for 90 days, with the goal of working toward a broader deal on trade in further talks. China said it would cancel or suspend some nontariff trade measures it had imposed to hit back at the U.S., potentially including easing export restrictions on critical minerals used in batteries and other high-tech applications. Speaking at a news conference in Geneva, Treasury Secretary Scott Bessent said the U.S. was seeking ‘a long-lasting and durable trade deal’ with China. He said a clear break between the two economies wasn’t desirable and ‘neither side wants to decouple.’ Bessent said the U.S. still had grave concerns about its unbalanced trading relationship with China. He cited issues such as China’s management of its currency and its subsidies for manufacturing, which Washington believes are a major factor driving factory-job losses in the U.S. Those and other issues will be discussed in talks over the next 90 days, he said. The outcome forestalls for now what was shaping up to be a destructive clash between the world’s two biggest economies, with potential ripple effects across the globe.” HPS ANALYSIS: HPS has confirmed that in addition to the 30 percent U.S. reciprocal import tariff on Chinese bicycles that goes into effect May 14, the following additional tariffs will also continue to be collected by U.S. Customs upon entry:

• Most-Favored-Nation (MFN) tariff: 5.5 percent on road bikes and 11.0 percent on all other bikes. Note that there is no MFN tariff on e-bikes.

• Section 301 Punitive Tariff: 25 percent on all bicycles and e-bikes.

Accordingly, Effective May 14, the total U.S. import duty that will be assessed on bicycles and e-bikes originating in China will be:

• Road Bikes: 5.5% + 25% + 30% = 60.5%

• All Other Bikes: 11% + 25% + 30% = 66%

• E-Bikes: 0 + 25% + 30+ = 55%

Assuming all goes well with this tariff deal with China, the above will be the import tariffs assessed on entries into the U.S. from May 14, for the next 90 days, until August 13, 2025. Ongoing trade negotiations between the U.S. and China will determine the tariff rates after August 14, 2025, and going forward. While the reduced tariffs under the trade deal announced today are a big and welcome reduction in landed cost of goods, HPS continues to oppose them as being outrageously high and will continue to advise its clients to lobby the Congress, the U.S. Trade Representative (USTR), the Department of the Treasury (DOT) and the Department of Commerce (DOC) to suspend or eliminate the Section 301 punitive, IEEPA National Security and Reciprocal import tariffs on bicycles and e-bikes originating in China and return to the Most Favored Nation tariffs that have been in effect for the last 25 years.

05 12 25: “The tariff climbdown: six takeaways from economists and analysts.” The Wall Street Journal WSJ: “1. This is a bigger-than-expected U-turn. Many market watchers were surprised by how much the U.S. and China agreed to cut tariffs. 2. But the trade war is far from over. The truce lasts 90 days. However, it could take longer to reach a full trade agreement. 3. The U.S. hasn't won concessions from Beijing yet. ‘It will be interesting to see whether China is willing to offer anything substantive in these talks, but I can’t see that they’ll feel under a huge amount of pressure to do so,’ said Mark Williams, chief Asia economist at Capital Economics, in an interview. ‘China has successfully called Trump’s bluff.’ Williams said China didn’t make concrete commitments to address U.S. concerns about what President Trump sees as an unfair trading relationship, for instance, by committing to open up its market to more U.S. goods. 4. The U.S. will still buy less Chinese stuff. With an effective tariff rate of 40 percent, Chinese exports to the U.S. are likely to fall by up to one-third, estimates Williams at Capital Economics. While exports would have fallen far more with tariffs above 100 percent, this will still mark a dramatic decline in trade between the two largest economies. 5. Fentanyl tariffs are now in focus. Economists at Citi say tariffs tied to the U.S. overdose crisis are ‘low-hanging fruit,’ and Beijing has already signaled it is willing to allay Trump’s concerns. However, since the U.S. has now slashed ‘reciprocal’ tariffs, scrapping fentanyl tariffs would mean China would be treated much like any other trading partner." 6. And the 'sell-America' trade is in question. European stocks have outshone U.S. markets this year, partly because of concern about the trade war's impact on U.S. companies. De-escalation could help close the gap, wrote analysts at Deutsche Bank, saying the Geneva deal ‘is likely to be a bigger positive driver for U.S. equities than for European equities.’” HPS ANALYSIS: Both sides agree they are seeking more balanced trade. The joint statement says that the U.S. and China will “establish a mechanism to continue discussions about economic and trade relations,” which will be led by China’s Vice Premier He Lifeng, alongside Treasury Secretary Bessent and U.S. Trade Representative Jamieson Greer. While Bessent and Greer led the negotiations over the weekend in Switzerland, they are two of the best and most experienced negotiators on the President’s team, and they will, of necessity, have to delegate the day-to-day and step in when required. Of all the “bad actor” countries that the Administration has identified, China is the biggest and most important, and if the next 90 days are going to yield positive trade results, the Administration and the President are going to have to pay close attention to the process started and agreed upon in Switzerland.

05 12 25: “Despite tariffs, car prices aren’t shooting up. That’s not necessarily a good thing.” CNN Business: “Tariffs are costing automakers billions, but they’ve announced little in the way of car price hikes. While that’s good for car buyers, it’s not necessarily good for the American economy. Costs have ballooned for car companies after the Trump administration imposed 25 percent tariffs on imported cars, nearly half the U.S. car market, as well as an additional 25 percent on imported parts, which every car built here depends on. Automakers would raise prices by double-digit percentages if they could, but there doesn’t appear to be enough demand. And given the importance of car sales to the U.S. economy, the industry is estimated to contribute more than 4 percent to overall GDP, soft demand for cars could be another recession warning bell. ‘We are definitely calling for an economic slowdown due to the tariffs,’ said Erin McLaughlin, senior economist with the Conference Board, a research firm known for tracking consumer confidence. ‘This is another way we’re going to have an economic slowdown.’ And that’s an effective, if somewhat painful, check on car prices. ‘We’re getting signals right now that none of the automakers are expecting to push the full cost of tariffs along to consumers,’ said Jonathan Smoke, chief economist for Cox Automotive. ‘They understand that this isn’t an environment that, regardless of prices moving up, people are still going to buy.’ Weaker car demand keeping prices in check: The auto industry sold 16 million new vehicles to U.S. buyers last year, almost half of which were imported. But there has been a sharp decline in plans to buy a vehicle, either new or used, over the course of the next six months, according to the Conference Board. Only 10.5 percent of American consumers intend to buy a car, and 2.4 percent intend to buy a new car, the firm found. That’s down from the 13.1 percent who were looking to buy as recently as December and the 2.9 percent looking for new. ‘People are nervous about inflation and tariffs, but they’re also beginning to be nervous about the employment situation,’ said the Conference Board’s McLaughlin, explaining the drop in car purchase intentions. Automakers will be watching to see if demand continues to drop, and if there are any signs the U.S. economy could fall into a recession. That’s among the worst situations for car sales, and companies may just have to absorb the higher costs. Some top executives told customers and investors recently that the elevated costs won’t cause a spike in car prices. Instead, they expect lower profits and lower sales, going forward this year.” HPS ANALYSIS: Is the American automobile business an exemplar of the American bicycle business? While the bicycle business doesn’t research its consumers as well as the automobile business does, there are close similarities. The retail pricing situation in the American bicycle business is much more convoluted and confusing than that of the automobile business, but the similarities are striking. A much higher percentage of bicycles and e-bikes are imported, so there is much more direct exposure to tariffs, but the difficulty of passing through the added cost of tariffs is similar. HPS believes that weaker demand for bicycles and e-bikes is a big part of depressing prices and making it very difficult to pass through all or part of the cost of tariffs to consumers.  

05 13 25: “More challenges for industry now U.S. and China agree to slash tariffs temporarily.” Bike Europe: “In what economists are calling a ‘substantial de-escalation,’ the United States and China have agreed to a temporary cut of 115 percentage points to reciprocal tariffs on each other's goods. The volatility and unpredictability of the market as a result of the U.S .President Donald Trump's imposition of tariffs is creating a new problem for the bicycle industry, which was nearing stabilisation after previous inventory problems. Representatives for the two global economic powers met in Geneva for a face-to-face discussion, where they agreed to a 90-day pause that will come into effect on Wednesday, 14 May. U.S. tariffs on Chinese products will fall to 30 percent, while China's reciprocal tariffs will drop to 10 percent. The retaliatory trade war between the U.S. and China has stoked industry-wide fears of the disruptions this dispute could cause to the bicycle supply chain, which is heavily reliant on Chinese manufacturing. Hike in demand: The last few months have shown that the Trump administration's decisions will lead to a huge hike in demand for bicycles and components in China for delivery in the next 90 days, and cancellation or postponement of orders in other countries like Taiwan and Vietnam. In a joint statement released by both countries on 12 May, the two emphasised the global importance of sustaining a mutually beneficial “bilateral economic and trade relationship. ‘The consensus from both delegations this weekend is neither side wants a decoupling,’ said U.S. Treasury Secretary Scott Bessent after the Geneva meeting. ‘What had occurred with these very high tariffs was the equivalent of an embargo, and neither side wants that. We do want trade.’ Rapidly changing landscape: Bicycle manufacturers and suppliers have suffered whiplash after Trump’s repeated reversals on reciprocal tariffs since he took office in January. On 9 April, Trump announced a 90-day pause on punishing reciprocal tariffs he had imposed mere hours before. This caused a wave of panic and confusion felt especially by Taiwanese manufacturers, who said U.S. customers immediately cancelled their shipments, only to reinstate them when the pause went into effect, according to AFP. While the initial shocking 32 percent tariff remains on pause, the 10 percent global levy is still in place, and the whole supply chain remains in limbo. March’s Taipei Cycle offered an early glimpse into this chaos as Taiwanese retailers reportedly considered production relocation and U.S. visitors were in a rush to discuss a ‘Plan B’.” HPS ANALYSIS: This article from Bike Europe provides a European view of the impact U.S. import tariffs are having on the rest of the global bicycle industry and the supply chains. While Bike Europe doesn’t address the issue directly, HPS has mentioned in the past that the global bicycle industry is connected through its multinational players, like Giant Global Group, Merida Bicycle, and Ideal Bicycle. The Taiwanese bicycle industry still owns and/or controls a good percentage of global manufacturing and supply distribution, including the Chinese export business to the specialty retail channel. This inter-connectivity creates the interdependencies this article references. Accordingly, the American import tariffs send ripples throughout the global bicycle industry.

05-13-25: “Have a very tariff Christmas.” Bloomberg Business Week Daily: “Because the process of bringing goods to the U.S. starts months in advance of their appearance on store shelves, a whole host of disruptions has already been baked into the rest of 2025, even if the average person can’t see them yet. In particular, it could be slim pickings for many seasonal goods commonly imported from China — prom and wedding dresses, fireworks for the Fourth of July, new tvs for football season, laptops for kids going off to college, and toys and gadgets and beauty product gift sets for Christmas — just as Americans head to stores looking for them. An extended period of shortages and financial strain on regular people might lead us into a very tariffed holiday season. Trump’s trade war has planted a series of bombs in the consumer economy that will go off for at least the rest of the year. Even if the tariffs disappeared tomorrow, a best-case scenario, ‘you probably have another six months to wrestle through it before you can get somewhat back to normalcy,’ says Rob Holston, the global and Americas consumer products sector leader at EY. ‘The spike has been put into the system, and it’s not like you can just pull it back.’ In an interview on Bloomberg Surveillance, Gene Seroka, the executive director at the Port of Los Angeles, the country’s busiest container port and the one that handles the bulk of Chinese imports, estimated that most U.S. retailers have only about a five- to seven-week stockpile of pre-tariffed goods left on hand.” HPS ANALYSIS: Logistics are too often not considered when doing supply chain planning, which leads to unforeseen disruptions and delays. This article covers an issue that HPS watches closely and urges its clients to pay close attention to when doing scenario and “what-if” planning. At the upcoming NBDA Retailer Summit in Bentonville, Ark. May 20-22, HPS will be discussing the situation at U.S. ports of entry, and specifically the twin ports of Los Angeles and Long Beach, where container ship traffic from China is down about 30 percent month over month. What happened when the 175.5-180 and 170 percent U.S. tariffs on Chinese bicycles and e-bikes were announced was that order cancellations from U.S. customers to Chinese OEMs started in early April. In early May, it was reported that no container ships from China had arrived at the port of Los Angeles over the last 12 hours, something that had not occurred since the pandemic. Brands and suppliers, the importers of record who pay the import duty, cancelled orders and some cancelled delivery and told the container lines that they were abandoning their loads on the ships and turning them over to the owners rather than pay the import duty. During late March and early April, the brands and suppliers imported from China as many bicycles and e-bikes as they could afford before the new tariffs went into effect, and cancelled when the tariffs actually went into effect as announced. On and after the effective date of the new tariffs, the supply channel from China dried up. Some of the OEMs in China start sending workers home, with some going back to their home villages. Component orders were cancelled, and sales departments prospected for new customers in other countries. That is the situation the American bicycle business has been in since the new tariffs went into effect. Warehouses are full, but nothing is on order. HPS is sure that on May 12 emails and phone calls from U.S. brand and suppliers reinstituted P.O.’s and LC’s, and some orders were placed that will pay the new 90-day U.S. tariff rates, while others will stay on hold until there is a conclusion to the negotiations and a final tariff rate is announced on or about August 13. Retailers and consumers are going to be whipsawed by pricing fluctuations and stock-outs, and uncertainty about when there will be some stability. HPS is advising that the turmoil will continue through most if not all of 2025, with no “stability” until 2026, if the U.S. and China are able to negotiate and sign a “balanced” trade agreement. Keep reading the HPS Bicycle Business Reporter for the latest tariff news.

Contact Jay Townley: jay@humanpoweredsolutions.com