TARIFFS EVOLVE, SAFETY REGULTIONS IN FLUX, “ANOTHER FINE MESS”
By Jay Townley
09 08 25: “Vosper: another fine mess, part three.” Bicycle Retailer and Industry News: “Welcome to the final installation in this series about the industry's current and ongoing oversupply situation. In Part One, we looked at some of the immediate causes (hint: Suppliers over-ordered, egged on by dealers doing the same, with the two combining to cause an unprecedented Bullwhip Effect). Part Two looked at some of the industry response, including an interview with Wayne Stetina about the thinking going on at both Shimano and SRAM at the time. Now in Part Three, we'll go back to some of the root causes of a quarter-century of virtually uninterrupted industry oversupply, featuring an interview with an anonymous senior executive as to what was going on with suppliers during the COVID-ordering frenzy and what the fallout was, and finish up with some suggestions about what we as an industry can do about all this. Let's start with how things got this way in the very largest sense. The plain fact is that bike and equipment brands in general and the Quadrumvirate in particular are still operating under the basic business principle of perpetually increasing their market share, and this has been the case ever since the Bike 2.0 era (end of the bike boom and introduction of the mountain bike through the late 1990s/early 2000s). Win enough market share, the theory goes, and your brand will become dominant, and we can worry about the profits then. Here's a newsflash: It didn't work then, and it doesn't work now. So there's that. HPS ANALYSIS: Rick Vosper has done an excellent job of laying out the history of the specialty bicycle retail channel of the American bicycle business over the last five decades. He is correct in his observation that the business models and strategies currently in play are: “simply not sustainable.” When you study all the channels of trade now selling to American consumers, this conclusion becomes even more obvious. Direct-to-consumer, or DTC, has risen in prominence and spread to become a part of traditional channels of trade and the undercutting of traditional brick-and-mortar distribution. In quoting Alex Haley, Rick rightly points out: "Either you deal with what is the reality, or you can be sure that the reality is going to deal with you." Rick is also correct in pointing out that we are at an inflection point, made uncertain, complex, dangerous, and awash in opportunity by evolving international trade and sourcing events. As Rick advises: “Choose wisely.”
09 09 25: “Supreme Court agrees to hear Trump tariff case this fall.” POLITICO: “The Supreme Court on Tuesday agreed to quickly hear a pair of broad legal challenges to President Donald Trump’s use of emergency powers to impose tariffs on countries around the world. By putting the cases on a highly accelerated track, with oral arguments in the first week of November, the justices indicated that they likely would resolve the issue quickly, perhaps as soon as the end of the year. The Trump administration is urging a rapid decision. At issue in the cases are the tens of billions of dollars of tariffs that Trump has collected since February under a nearly 50-year-old law known as the International Emergency Economic Powers Act. The Congressional Budget Office has forecast Trump’s tariffs could reduce the budget deficit by $4 trillion over the next decade if left in place, while economists warn the tariffs could hurt U.S. economic growth and drive up inflation, making it one of the biggest economic issues the Supreme Court has ever faced. ‘The stakes in this case could not be higher,’ Solicitor General D. John Sauer said last month in the Justice Department’s petition. ‘The President and his cabinet officials have determined that the tariffs are promoting peace and unprecedented economic prosperity, and that the denial of tariff authority would expose our nation to trade retaliation without effective defenses, and thrust America back to the brink of economic catastrophe.’ Presidents have drawn on the 1977 law to impose economic sanctions on a long list of countries during the past five decades, but no president before Trump has used it to impose tariffs and to pressure other countries into trade negotiations. Critics say Trump abused the law to impose massive new tariffs, a power that the Constitution assigns to Congress, although it has yielded some of its authority in that area to the White House over the past century. Last month, a federal appeals court ruled, 7-4, that Trump had overstepped his authority to enact two sets of emergency tariffs: one imposed on most countries aimed at reducing the large U.S. trade deficit and another set aimed at China, Mexico, and Canada to pressure those countries to stop fentanyl and precursor chemicals from entering the United States. That appeals court ruling was the third loss for the administration, following a May ruling by the U.S. Court of International Trade in the same case — brought by a group of small businesses and 12 Democratic-run states — and a ruling in a separate case by Judge Rudolph Contreras in U.S. District Court in Washington. The Supreme Court agreed to consolidate the district court case brought by the two Illinois toy companies with the case brought by the other small businesses and the Democratic-run states. Both the international trade court and Contreras granted injunctions barring the administration from collecting the tariffs, but they put those injunctions on hold to allow time for an appeal. The Supreme Court’s decision to take up the case allows the Trump administration to continue collecting the tariffs until the justices rule. Sauer asked the high court to resolve the case as quickly as possible, and by setting an accelerated briefing schedule and quick oral argument, the justices indicated that they are taking that request seriously. But there is no guarantee that a ruling will come right away. After hearing the case, the justices could take until June to issue a decision. That’s when the final and most momentous decisions of the term are typically released. The case does not affect some other Trump tariffs, such as the 50 percent duties he has imposed on steel, aluminum, and copper to protect national security, and 25 percent duties on autos and auto parts using the same rationale.” HPS ANALYSIS: My apologies for the length of this quote from POLITICO, but this is the first of three major events that are and will continue to affect the import-dependent American bicycle business going forward. The Supreme Court (SCOTUS) will now decide if the tariffs imposed by the administration under the International Emergency Economic Powers Act (IEEPA) and related reciprocal tariffs are illegal, as found by the lower courts, or not. Customs has continued to collect all tariffs, including the IEEPA and reciprocal, along with the applicable most favored nation (MFN), Section 301 punitive tariff against China, and the more recent Section 232 steel tariff against all countries. SCOTUS will hear oral arguments the first week of November, and a decision is expected as early as December 2025, or as late as June 2026. If the IEEPA and reciprocal tariffs are found to be illegal, they will be struck down, and Customs will stop collecting them. However, NBDA has been informed that there will probably be no refunds forthcoming. The MFN, 301, and 232 tariffs are not affected by the SCOTUS decision. Also, the administration is already working on replacing the IEEPA and reciprocal tariffs with new tariffs issued under the Trade Act of 1974, which is the issuing authority for Section 232 steel and aluminium and 301 tariffs. All of this has created a great deal of confusion and uncertainty in the U.S. importing community. HPS is also closely following the final decision by the United States Trade Representative (USTR) on the applicability of 232 steel and aluminium tariffs to bicycle and e-bike imports due after the comment period closes on October 21, and the final trade negotiations with China, Taiwan, and Vietnam.
09 11 25: “Industry outlook in focus ahead of Taichung Bike Week 2025.” BIKE Europe: “The annual event for product managers has become the next big thing on the calendar to gauge industry sentiment. The positive market expectations signaled at Eurobike last June are now under severe pressure. What can the industry expect from Taichung Bike Week 2025 next week? High hopes were expressed at Eurobike for the market recovery by the end of 2025. Inventory levels were expected to return to normal levels by early 2026, leaving the sector ready for a fresh start to the 2026 sales season. However, recent political and economic developments have caused expectations for market improvement to be pushed back. The impact of the United States’ tariff war on the Taiwanese bicycle industry is greater than expected, while economic uncertainty has slowed demand in China. However, there is more going on that is putting pressure on Taiwanese suppliers to the bicycle and e-bike industry. Giant and Merida shipments declined: Both Giant and Merida reported double-digit revenue declines in August. This hasn’t happened since last February, when Giant reported a big plus of 30 percent in revenue. It turned out not to be the prelude to an increase in turnover for the rest of the year. Last August, Giant reported a slowdown in sales of 26.7 percent, the sixth month in a row with less revenue. Also, Merida has been facing a difficult year so far. Consolidated shipments dropped by 29 percent in August and 31 percent from January to August compared with last year. The year-on-year revenue declined by eight percent during the first eight months of 2025. For both companies, the Chinese market is the stumbling block at the moment. Giant didn’t give any specific numbers for the Chinese market, but Merida reported a year-on-year decrease of 53 percent in value and 40 percent in volume. Appreciation of New Taiwan Dollar: Giant Group Chairman Young Liu stated earlier this year that their inventory level was already 10 percent lower than in 2019. It is unclear whether Giant has managed to maintain this inventory level through 2025, or whether it has risen again. The appreciation of the New Taiwan Dollar between April and July, when the currency lost 12.17 percent against the U.S. dollar, has taken a heavy toll on the industry. It was even reason for Young Liu to call for drastic interest rate cuts to depreciate the New Taiwan Dollar and support the industry. According to local media, Liu stated, ‘tariffs have impacted the industry, but the exchange rate has a greater impact.’ He also asked the government for direct support for the industry. Did the industry become more flexible? In Taichung, the key issue will be how the sector is flexible enough to handle the changing business environment.” HPS ANALYSIS: Taichung Bike Week became a focal point for the international bicycle industry and business at the end of the summer season, and this article touched on the financial health of two international Taiwanese brands and OEMs, and the appreciation of the Taiwanese dollar, or NT, all as related to the current tariff and trade chaos. HPS suggests that the overall financial situation in the global bicycle industry and business remains shrouded in privatization and protective reporting, and suggests taking a good look at the story of bankruptcies and the role tariffs played overall. As we have painfully learned, the collateral damage caused by the emergency tariffs and those imposed under the Trade Act of 1974 has extended to importers at all levels and is impacting financing, interest rates, valuations, and the value of currencies. What was a stable international bicycle trade is slowly unwinding into a chaos of unknowns and uncertainties. It is becoming clear that at least some of the chaos is intended to make it difficult and expensive to be an American importer. HPS suggests readers look at this Bike Europe article about Taichung Bike Week as before.
09 23 25: “Taichung Bike Week shows industry still waiting for turnaround.” BIKE Europe: “The 2025 Taichung Bike Week did not bring the hoped-for signals of market improvement. Overnight rooms in the organizing hotels were still available shortly before the event started, and exhibitors were looking at empty agendas on the opening day. There is a growing awareness among insiders that the industry needs structural changes, and fears that current market uncertainty will soon reach a boiling point. During Taichung Bike Week, which started on 16 September and closed on 19 September, almost all exhibitors confirmed to Bike Europe that it had not been easy to schedule meetings in the weeks before the event. Product managers saw no purpose in coming over to Taiwan, or their trip was cancelled for budget reasons. The impact of the low interest in the product managers' event was clearly visible during the bike week hosted by the hotels Evergreen Laurel, Tempus, and Splendor. There were no crowds waiting for the elevators to go up to the meeting rooms, empty hallways, and component manufacturers strolling on the show floors looking for a chat with somebody. Day two started with a busy crowd in the lounge of the Evergreen hotel, but that quickly disappeared. No budget for product innovations: The positive vibe budding at Eurobike evaporated during the summer months. The industry has entered the next phase in the aftermath of the inventory crisis. The excess inventory might have been reduced to reasonable levels, but OEMs and brands have burned so much money with hard discounting that there are currently no budgets available for product innovations. The industry still needs to go through more ups and downs before the supply chain will see some stabilisation. ‘An extreme spike in demand is always followed by a rapid decline, and it then takes a while for the market to stabilize,’ said Jeroen Both, Accell's former chief supply chain officer, to Bike Europe last June. Due to budget cuts at OEMs, component manufacturers were holding back their innovations. As a result, many Taiwanese component manufacturers were holding back their innovations at Taichung Bike Week. For many, the next opportunity to launch their new products is the Taipei Cycle Show. Major market disruptors: In an attempt to slowly build up the necessary resources again, bicycle brands continue to distribute the existing model ranges. But even for those categories, OEMs didn’t want to give a forecast to their suppliers, being afraid of the next market disruption to come. There is reason enough, however, to operate with caution and not to enter into long-term commitments.” HPS ANALYSIS: This is the “after” Taichung Bike Week article. Bottom line: low turnout and little or no commitments for the coming season. The global bicycle industry is frozen in place by reduced sales and revenue – and the uncertainty of tariffs. The U.S. bicycle industry association has issued a forecast calling for a depressed market for the rest of this decade, with no recovery before 2031. HPS submits that this is forecasting markets that no longer exist. The bicycle business, like other outdoor and recreational businesses, has lost touch with its customers, and needs to invest in primary consumer research to reconnect and really understand each demographic cohort and what products and retail formats will gain their trust and that they will spend their money with.
09 24 25: “CPSC takes another step to advance draft rule on lithium-ion batteries used In micromobility products.” mondaq: “The U.S. Consumer Product Safety Commission's (CPSC's) proposed safety standard for lithium-ion batteries used in micromobility products is back on the agency's agenda. On August 21, Acting Chairman and current sole commissioner of the CPSC, Peter Feldman, issued a statement announcing several advancements of ‘critical safety standards’ to the Office of Information and Regulatory Affairs (OIRA) pursuant to Executive Order No. 14215, ‘Ensuring Accountability for All Agencies,’ including the CPSC's draft proposed rule on lithium-ion batteries used in micromobility products. The lithium-ion micromobility product standard, and whether the CPSC would put it forward for codification, has been in flux for months. The CPSC originally introduced the rule on January 8, 2025, following the bipartisan ‘Setting Consumer Standards for Lithium-Ion Batteries Act’ bill signaling Congress's desire for the CPSC to issue a consumer product safety standard for rechargeable lithium-ion batteries used in micromobility devices. In April, the CPSC voted to move forward with the rule, but subsequently withdrew it following President Trump's firing of three Democratic Commissioners. The proposed rule was most recently re-noticed by the CPSC on June 20, 2025, when those three commissioners were temporarily reinstated, but withdrawn just days later, without explanation. The purpose of the draft standard is to address the potential risk of death and injury associated with lithium-ion batteries used in micromobility product electrical systems, which could include hazards related to electric shock, fires, explosions, expulsion of gas or flames, burns, overheating, and smoke inhalation. The rule proposes modifications to the performance requirements set forth in the current voluntary standards covering lithium-ion batteries in micromobility devices: UL 2849-20 (Standard for Safety for Electrical Systems for eBikes), UL 2272-24 (Standard for Safety for Electrical Systems for Personal E-Mobility Devices), and UL 2271-23 (Standard for Safety for Batteries for Use in Light Electric Vehicle (LEV) Applications). If passed, the rule would be codified as a consumer product safety standard and would impose performance requirements on both original electrical systems on lithium-ion battery-powered vehicles, including e-bikes, e-scooters, self-balancing scooters (such as hoverboards); e-skateboards, e-unicycles, and hybrids of these micromobility products within the CPSC's jurisdiction, as well as replaceable battery packs, aftermarket chargers, and conversion kit components sold separately. The acting chairman's statement on the issuance of the lithium-ion battery rule came one day after a statement announcing the withdrawal of other pending CPSC rulemakings, including proposed safety standards on blade-contact injuries on table saws, recreational off-highway vehicles, debris penetration hazards, and banned hazardous substances, which emphasized ‘a turning point’ for the CPSC and a return ‘to a safety mission rooted in sound science, robust data, and common sense.’" HPS ANALYSIS: This is almost unbelievable! As the Consumer Product Safety Commission (CPSC) we have learned to live and get along with for the last 50 years is sinking out of existence, one rule popped up like a balloon out of water. The Acting Chairman's statement on the issuance of the lithium-ion battery rule came one day after a statement announcing the withdrawal of other pending CPSC rulemakings.” HPS will watch closely, and despite the uncertainty and the proposed rule's turbulent history, this action indicates that federal lithium-ion battery regulations are a current priority for the agency and may actually be forthcoming. If the "Setting Consumer Standards for Lithium-Ion Batteries Act" bill is passed by the Senate, the CPSC would have a 180-day deadline to promulgate micromobility regulations. The NBDA and voluntary UL 2849 and UL 2271 standards are aligned and will dovetail into a mandatory federal CPSC regulation if forthcoming.
09 25 25: “All Giant Bicycles Taiwan shipments barred by U.S. Customs over alleged worker rights violations.” BIKE Europe: “U.S. Customs and Border Protection (CBP) announced Wednesday that it will detain and withhold all shipments of bicycles, bike parts, and accessories manufactured at Giant's Taiwan facility based on evidence indicating forced labour. In response, Giant Bicycles Group has released a statement detailing several measures the company has taken this year to mitigate debt bondage and provide housing to its migrant workers. ‘Giant Group remains dedicated to protecting labour rights through concrete actions and ensuring a transparent, fair, and sustainable development,’ the company stated in its press release. It added that it has already taken several steps to address potential labour rights violations at its Taiwan manufacturing location at the start of this year. ‘We will contact CBP to file a petition to seek the revocation of the WRO and explain that the company has already adopted appropriate measures.’ Withhold Release Order: According to the report, the CBP identified several forced labour indicators during its investigation into Giant’s Taiwan factory, including: abuse of vulnerability, abusive working and living conditions, debt bondage, withholding of wages, and excessive overtime. The report accused Giant of profiting from these abuses by using forced labour to produce goods below market value. The order suspends all imports of products manufactured by Giant in Taiwan and exported to the U.S. until further notice. Other markets will remain unaffected. Once goods are detained by the U.S. CBP, importers can either elect to destroy the goods or send them back overseas and attempt to prove the merchandise is legal. U.S. CBP commissioner Rodney Scott said this latest withhold release order is part of a larger crackdown on companies that use forced labour ‘to the detriment of law-abiding US businesses.’” HPS ANALYSIS: While abusive working and living conditions should never be acceptable or tolerated, they unfortunately exist right here in the United States as this is being written. With that said, Giant Taiwan and the whole of the Taiwanese bicycle industry need to quickly certify that all Taiwanese factories meet international and U.S. labor rules and regulations. While Giant has confirmed that none of its Taiwanese-manufactured products have been embargoed by U.S. Customs and Border Protection (CBP), they have also stated that all such products have been turned around and returned to Taiwan. Subsequently, Merida and other Taiwanese bicycle-related brands have been called out by CBP, and the Taiwanese bicycle trade association has reached out to the Taiwanese government to clear up this trade issue with CBP. However, it is also apparent that very few, if any, Taiwanese bicycles, e-bikes, or related parts or accessories have entered a U.S. port since early September as a result of the WRO imposed on Giant Taiwan. Taiwan was the source of 30 percent of U.S. bicycle imports in 2024, and is the primary source of high-end products. While Giant continues to import its brand products manufactured in other countries into the U.S., the WRO has restricted the availability of some Giant products imported and available to U.S. consumers. Making it difficult to import is a stated policy of the U.S. Commerce Department, and HPS submits that, despite the optics, this is an example of this policy in action.
10 08 25: “PeopleForBikes urges industry action as Guardian calls for ‘crushing’ new tariffs.” Bicycle Retailer and Industry News: “Trade group PeopleForBikes is calling on its members to respond — quickly — to public requests from the domestic manufacturer Guardian Bikes and an aluminum trade group for steeper tariffs on imported bikes and e-bikes. Guardian, which builds juvenile bikes at an Indiana factory and sells direct to consumers, has filed a public comment with the U.S. Trade Representative requesting that the aluminum and steel content of all bicycles and frames imported into the U.S., from any country, be added to a list of items subject to a 50 percent tariff. Guardian also requests that the aluminum content of electric bicycles with motors greater than 250 watts be subject to a 50 percent tariff. Guardian said that reshoring bicycle and bicycle-frame manufacturing would eliminate over 200 million pounds of steel imports and 40 million pounds of aluminum imports. ‘The domestic manufacturing sector holds untapped potential to support high-volume bicycle production,’ the company said. ‘A scaled domestic supply chain for bicycles will spur demand for domestic steel and aluminum, as well as metal fabrication, welding, tool, and die making skills necessary for reindustrializing the nation. Many existing machine shops and component suppliers currently serving the U.S. automotive industry are well-positioned to transition into manufacturing precision high-volume metal fabrication, welding, and component production could be leveraged to rapidly scale domestic bicycle component manufacturing,’ it said in its comment to the USTR. Currently, bikes and frames are not included on the USTR's lists of ‘derivative’ products subject to steel and aluminum tariffs, although some bike products, including steel chains, steel e-bikes, and steel exercise equipment, including bike trainers, are on lists of derivatives subject to the material tariffs. While the steel and aluminum content of some parts of bikes might be subject to the material tariffs, adding complete bikes, frames, and e-bikes to the list of derivatives would make the entire product subject to the tariffs. Bikes, frames, and e-bikes are already subject to the Trump administration’s ‘reciprocal’ tariffs, which vary by nation, and long-standing duties. Bikes and frames from China are also subject to other tariffs, including Section 301 tariffs of up to 25 percent. The Aluminum Extruders Council, a trade group, left a comment with the USTR in which it included bikes, frames, and e-bikes on a list of items it is requesting the USTR add to its derivative list. No other comments regarding bikes are currently posted. PeopleForBikes is urging members to file comments with the USTR in opposition to the requests by Guardian and the Extruders Council. ‘Our only opportunity to oppose these requested tariffs will end on October 21 when the two-week comment period closes,’ the organization told members in an email on Wednesday. ‘PeopleForBikes will submit comments in opposition to these two requests and work with allies to do the same, but we need your help if we are to have a reasonable chance of stopping these new, crushing tariffs.’ PeopleForBikes has created a template and talking points for industry comments and has instructions on leaving comments on its website.” HPS ANALYSIS: As this article makes clear, this proposed Section 232 steel and aluminum content tariffs under the Trade Act of 1974 are not involved in the tariffs struck down by the International Trade Court and under appeal before the U.S. Supreme Court (SCOTUS). The request to include imported bicycles and e-bikes was specifically made by the domestic manufacturer Guardian Bikes, a DTC seller, and an aluminum trade group. Neither of these parties can supply the needs of the horizontal American bicycle and e-bike market, and neither can financially support reshoring bicycle or e-bike manufacturing in the U.S. HPS was recently a participant in an industry advisory group that brought up the question of “why” Guardian Bikes was requesting that bicycles and e-bikes be specifically added to the Section 232 Steel and Aluminum content tariffs, and nobody had a clue. The Aluminum Extruders Council, on the other hand, while misguided, is more understandable. The NBDA has already submitted comments according to the PeopleForBikes (PFB) instructions and templates, and HPS encourages everyone in the U.S. bicycle business to join with PFB in opposing these potentially “crushing” new tariffs. How “crushing”? Read the next article!
10 09 25: “How are steel and aluminum tariffs calculated on bikes?” Bicycle Retailer and Industry News: “There are as many ways to calculate Section 232 tariffs on imported steel and aluminum as there are companies importing products containing those common materials. But most bike importers tell BRAIN that if bikes and e-bikes become subject to the tariffs, it will add hundreds of dollars to the cost of bikes at wholesale, and even more at retail. Some bike products, including e-bikes, chains, exercise bikes/trainers, and some hand tools, are already subject to Section 232 tariffs. The chains and tools were added in March while e-bikes and trainers were added in August. Now, Guardian Bikes and an aluminum extruder trade group have requested that all bikes, bike frames, and some e-bikes be added to the derivative lists for both Section 232 steel and aluminum tariffs. If added, these new tariffs would apply to imports from all countries. PeopleForBikes said such a move would be ‘crushing’ to the industry and is urging industry members to leave comments in opposition on a Department of Commerce website. Since the first list of derivatives was released this spring, importers have struggled to understand how to apply them. PeopleForBikes policy counsel Matt Moore told BRAIN that the ‘valuation of merchandise for customs purposes is a complicated area.; But Moore said a Customs and Border Protection FAQ page is clear about how to value steel products. ‘It’s the price paid for the steel content in the form purchased,’ Moore told BRAIN, paraphrasing the FAQ, ‘not the price of the raw material farther up the supply chain.’ Since the first Trump administration imposed Section 301 tariffs of up to 25 percent on Chinese imports, industry experts have been quick to note that these tariffs ‘stack’ on top of pre-existing tariffs, instead of substituting for them. ‘It’s fairly certain that, if imposed, the steel and aluminum tariffs requested this week would stack on top of most existing tariffs, including the long-standing MFN duties of 5.5-11 percent on bikes, Section 301 tariffs on Chinese imports of up to 25 percent, and the so-called fentanyl tariff on Chinese goods of 20 percent. But there is some uncertainty about whether the new Section 232 tariffs, if imposed, would stack on the administration’s ‘reciprocal’ tariffs, which range from 10-50 percent depending on the country of origin. (Reciprocal and fentanyl tariffs are each imposed under the International Emergency Economic Powers Act (IEEPA).’
If the reciprocal tariff stacked on the 232, the total on a Chinese non-electric bike would look like this:
$450 Section 232 steel or aluminum content (50 percent of the $900 value).
$100 Reciprocal (IEEPA) (10 percent applied to the full $1,000 value).
$250 Section 301 applied to $1,000.
$200 fentanyl IEEPA applied to $1,000.
$110 MFN duty of 11% applied to $1,000.
This adds up to a total of $1,120, or an effective tariff rate of 112 percent
The same bike from Taiwan is not subject to the Section 301 or fentanyl tariffs. So the non-stacking costs would be:
$450 Section 232 steel or aluminum content (50 percent applied to the $900 value).
$20 Reciprocal (IEEPA) rate applied to the remaining $100 of non-steel or aluminum content.
$110 MFN duty of 11 percent applied to the $1,000 value.
This adds up to a total of $570, or an effective tariff of 57 percent.
Bottom line: Whether the Section 232 tariffs stack or not, they add up to hundreds of additional dollars on the importer’s landed costs, which equates to even more added to wholesale and retail costs. No drawbacks. In another twist, the Section 232 tariffs paid are not eligible for drawback, meaning if an importer reships a product to another nation, they would not be able to recover the Section 232 tariffs paid the way they can recover other tariffs paid. This adds costs for importers who service other countries from a U.S. warehouse.” HPS ANALYSIS: BRAIN is making a real effort to help readers understand how “crushing” these proposed Section 232 Steel and Aluminium tariffs will be. They also are making it clear that U.S. Customs and Border Protection (CBP) is “stacking” or including and adding up all the import tariffs applicable to bicycles and e-bikes. HPS has confirmed this with the bicycle industry advisor to the U.S. Trade Representative (USTR). This means that there are potentially five tariffs applied to imported bicycles, e-bikes, parts and components, as follows: Most Favored Nation (MFN), Emergency Tariffs (IEEPA), Section 301 (China only), Section 232 (steel, aluminum is pending), and reciprocal (baseline). Of these five, two, IEEPA and reciprocal, are under appeal before the Supreme Court (SCOTUS) and, if struck down, they will be replaced by the administration. HPS has been involved in lobbying and working with U.S. import tariffs for 50 years. The imposition of Section 232 Steel and Aluminum tariffs on all source countries and Section 301 punitive tariffs on Chinese-sourced products, combined with “stacking,” has enhanced and informed our reshoring and import sourcing probabilities and triggered pivoting scenarios with immediate effect.
10 10 25: “Trump threatens 'massive' tariffs and cancelling meeting after China's rare earth curb.” National Public Radio npr: “President Trump is threatening new tariffs a day after China introduced new restrictions on exports of rare earths and related technology on Thursday. Analysts say the export controls were an attempt to boost Beijing's leverage in trade talks with the United States, but Trump now says he may call off a planned meeting with Chinese leader Xi Jinping later this month. ‘I have not spoken to President Xi because there was no reason to do so,’ Trump wrote on Truth Social on Friday. ‘This was a real surprise, not only to me, but to all the leaders of the free world. I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so.’ The meeting planned on the sidelines of an Asia-Pacific summit would be the first face-to-face meeting between Xi and a U.S. president in nearly a year. The main target of the Ministry of Commerce's so-called ‘unreliable entities list’ appears to be U.S. defense technology companies, which rely on rare earths from China. Halifax International Security Forum, an annual security summit held in Halifax, Canada, is also on the list. China processes around 90 percent of the world's rare earths, which are critical inputs in everything from smartphones to advanced fighter jets. Beijing has used its dominance in rare earths to apply pressure to the United States as trade friction intensified this year following Trump's ‘liberation day’ tariffs.” HPS ANALYSIS: The U.S. continues to be outflanked by China. According to a string of announcements from the Chinese Thursday, the new rules expand the list of controlled rare earths that require licenses for export, restrict the types of rare earth recycling and processing equipment that can be sent abroad, and clamp down on the use of Chinese rare earths in the overseas chip sector and in military applications. Dan Wang, China director at the Eurasia Group, said the move signals ‘a deliberate effort to strengthen China's bargaining position’ ahead of the potential meeting between Trump and Xi. China mines 90 percent of the world’s rare earths, and the U.S. is currently dependent on China for the products of rare earth mining and processing for its computer and chip industries. The last time China played the ‘rare earths’ card, the U.S. couldn’t get to the negotiation table quickly enough. This time, the administration is starting with playing the bully, but China knows it is holding a winning hand. This is the kind of uncertainty and lack of consistency that has moved HPS to recommend clients pivot on reshoring and sourcing.
10 12 25: “China accuses U.S .of 'double standards' over tariff threat.” British Broadcasting Corporation BBC: “Donald Trump's latest threat to impose an additional 100 percent tariff on Chinese goods is ‘a typical example of U.S. double standards,’ China's government has said. A commerce ministry spokesperson also said China could introduce its own unspecified ‘countermeasures’ if the U.S. president carries out his threat, adding it was ‘not afraid’ of a possible trade war. On Friday, Trump hit back at Beijing's move to tighten its rules for rare earths exports, accusing it of ‘becoming very hostile’ and trying to hold the world ‘captive.’ He also threatened to pull out of a meeting with China's President Xi Jinping later this month. But on Sunday, Trump wrote: ‘Don't worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn't want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!,’ Trump said in a post on social media, without elaborating further. Trump's comments on Friday rattled financial markets, with the S&P 500 share index closing down 2.7 percent, its steepest fall since April. The president's words renewed fears of a trade war between the U.S. and China. In May, the two sides had agreed to drop triple-digit tariffs on each other's goods. which had raised the prospect of trade halting between the two countries. This left U.S. tariffs on Chinese goods facing an added 30 percent levy compared with the start of the year, while U.S. goods entering China face a 10 percent tariff.” HPS ANALYSIS: The remaining trade negotiations with China, Taiwan, and Vietnam are the third and last string of the international trade whole cloth that is unwinding the HPS trade scenario that is based on the last 50 years of practice in the global bicycle business. The first is the tariff case before the U.S. Supreme Court that will decide if the administration’s IEEPA and reciprocal tariffs are illegal, or not. Second, the U.S. Trade Representative’s final decision on bicycles and e-bikes being included in the Section 232 Steel and Aluminum tariffs. This third leg of the stool, in HPS’s opinion, will be driven by China and the stock market reaction to what comes out of the U.S.-China trade negotiations. Taiwan may very well be a pawn in the U.S.-China negotiation, and in any case, its status will inform future sourcing considerations. This is also true of Vietnam. What we haven’t listed are the other sourcing probabilities that emerge from China, Taiwan, and Vietnam trade negotiations, and the evolution of U.S. tariffs. Reshoring is also an important consideration that is included in the associated probabilities. When you would like to discuss this newsletter and its opinions, send me an e-mail or give me a call.
Contact Jay Townley: jay@humanpoweredsolutions.com or cell: 1-608-385-3077