TARIFF CHAOS DISRUPTS U.S. BUSINESS!

By Jay Townley

08 15 25: “Bicycle industry frustrated by uncertainty after latest U.S. tariff pause.” Bike Europe: “United States President Donald Trump has signed a new executive order this week extending the current pause on high U.S. tariffs for Chinese goods and clarifying trade agreements made with the European Union. On August 11, President Trump allowed an additional 90 days for negotiation between China and the U.S. to reach an agreement on trade terms and, with luck, avoid the steep 145 percent tariff initially imposed. The White House also further clarified trade arrangements with Japan and the E.U.. Following talks at the end of July, Japan and the E.U. reached framework trade agreements with the U.S. for a baseline tariff rate of 15 percent on all imports. E.U. and Japan trade deals come into focus: With the baseline agreement, categories like bicycles (11 percent) will experience minor increases to 15 percent, while others that were once duty-free, like e-bikes, will experience bigger jumps from 0 percent to 15 percent. Bicycle components with base duties between 0 percent and 10 percent would also move up to 15 percent, according to the U.S. industry organization PeopleForBikes. ‘While these developments are not great for the bicycle industry, they are far less severe than the sweeping additional tariffs proposed in April,’ a spokesperson for PeopleForBikes added. Finding the silver lining in these skewed trade deals is necessary, as the E.U. and Japan accept historically high tariff rates to avoid being hit with harsher measures like those in Asia.  Asian imports face high tariffs: The executive order also solidifies the most recent U.S.-China trade terms, reducing the 145 percent tariff to 30 percent until at least 8 November, according to PeopleForBikes. China’s reciprocal tariffs on U.S. goods also subsequently remained at 10 percent as opposed to the initial 125 percent. High tariff rates now apply to pretty much all Asian imports to the U.S., including bicycles, their components, and accessories, which primarily come from China, Taiwan, Vietnam, and Cambodia. New reciprocal tariff rates were announced by the U.S. via a 31 July executive order on goods imported from Cambodia (19 percent), Vietnam (20 percent), and Taiwan (20 percent). These rates, when combined with existing base rates, amount to about the same as those for China, according to PeopleForBikes. Short-term market effects create long-term decisions: In the short term, many companies expressed their frustration over the lack of market certainty, leaving them in the dark on important strategic decisions. Some brands, like German tire manufacturer Schwalbe, have tried to remain agile in the shifting tariff sands – trying to mitigate impacts by stuffing their North American warehouses full of bike components before the tariffs hit. Now that they are in effect, Nico Simons, chief sales officer of Ralf Bohle GmbH, said the company’s long-term plans are on hold.” HPS ANALYSIS: Uncertainty was the best way to describe the trade and tariff situation the bicycle industry and business faced in mid-August, and while the tariff “pause” relative to U.S. trade with China is still in effect, three other issues have added to the overall state of uncertainty. As our readers will see as they progress through this, and the fifteen additional articles that are contained in this month’s issue, the U.S. has levied a 50 percent tariff on imports from India, issued new Section 232 tariffs of up to 50 percent on imports of goods with steel content that was “poured” outside the U.S.. An appeals court has found the U.S. reciprocal tariffs levied under the IEEPA are illegal, and the administration has appealed the appellate court decision to the U.S. Supreme Court, all between August 15 and September 4. This uncertainty on steroids has led some companies to withdraw from the U.S. bicycle and e-bike market, others to put all future planning on hold, and some to go out of business. HPS exists to help companies and brands in the global bicycle and e-bike business craft business strategies to survive unprecedented times like this, and to prosper going forward.

08 15 25: “The U.S. economy is a puzzle, but the pieces aren't fitting together.” BBC NEWS: “Ask almost any economist and they will tell you: U.S. President Donald Trump has been running risks with the world's largest economy. They say his tariffs and crackdown on immigrants risk a return of 1970s-esque ‘stagflation,’ when a sudden oil shock prompted stagnant growth and spiraling prices, except this time the crisis would be self-inflicted. The White House has just as steadfastly dismissed those concerns, attacking the experts and, in the case of the U.S. Bureau of Labor Statistics commissioner, firing her. Questions about how it will all play out have left the U.S. central bank in a state of paralysis, as it waits for data to clarify what's happening before making a move on interest rates. But after a busy few weeks of company updates, data on jobs, and inflation, we still don't really know. The labour market is sending clearly worrisome signals. Job creation was almost non-existent in May and June, sluggish in July, and the ranks of discouraged workers are growing. That 1 August jobs report sent the stock market sinking and Trump into a tailspin, prompting him to fire the BLS commissioner. A few days later, Moody's Analytics economist Mark Zandi declared on social media that the economy was ‘on the precipice of a recession.’ That's not the consensus. For sure, the economy has slowed, growing at an annual rate of 1.2 percent in the first half of the year, down one percentage point from 2024. But consumer spending, despite weakening, has stayed more resilient than many had expected, despite downbeat assessments by some firms. Shares, after the 1 August hit, quickly resumed their upward march. ‘We continue to struggle to see signs of weakness,’ the chief financial officer of JPMorgan Chase, America's biggest bank, told investors last month. ‘The consumer basically seems to be fine.’ That has raised hopes that the economy might power through, as it did a few years ago, to widespread surprise, despite getting hit with the highest inflation since the 1980s and a sharp rise in interest rates.”  HPS ANALYSIS: “ … the pieces aren't fitting together” is what worries HPS. To many of you currently in the business, “stagflation” has no real meaning. I was a middle manager working for the Schwinn Bicycle Company in the 1970s, when stagnant economic growth, elevated unemployment, and high inflation plagued the Carter administration and swept Richard Nixon into office. Stagflation was brutal and, worryingly, both consumer and producer inflation show the uptick in prices is not limited to goods, suggesting stagflation might very well be staging a return, and “the die is cast” as the saying goes. No matter what SCOTUS decides, tariffs, in some form, are in the future of our business, and their economic impact will determine the economic conditions we will have to understand and master.

08 16 25: “Americans pull back from an epic credit card binge.” The Wall Street Journal: “Americans are starting to pull back from a pandemic-era credit-card binge. After a surge in credit-card spending that pushed Americans’ card balances above $1 trillion, growth is now moderating. Credit card spending has been growing more slowly than debit card spending since late last year, the first such stretch in nearly four years, according to the latest spending data from Visa and Mastercard. Credit card originations had soared during the recent period of high inflation. That allowed Americans to keep spending on discretionary items even after money ran out from pandemic stimulus payments. More recently, household budgets have been under pressure on several fronts, from the resumption of student-loan payments to high credit-card interest rates. In that environment, some card companies are becoming pickier about whom they offer cards to, focusing on well-heeled customers. Consumers are growing more cautious about taking on new debt. ‘We saw this meteoric rise in credit-card debt,’ said Charlie Wise, senior vice president at TransUnion, a credit-reporting bureau. ‘We’re seeing consumers rein themselves in.’ Ciara Zurita-Jackson said she cut up her American Express Gold Card in February, deleted all the virtual card numbers from her smartphone, and stowed the rest of her 28 cards in a wallet she doesn’t use. After racking up $72,000 in credit card debt, her monthly payments had swelled to $2,800, she said. That was more than her mortgage and car loan combined. The 27-year-old medical sales representative from San Antonio had gone on a three-year shopping spree that included a $6,700 water softener, $4,000 for Christmas gifts and food, and trips to Miami and Orlando, Fla. She took banks up on their introductory offers and points, and felt as though she was staying ahead by making minimum payments. ‘I was seeing credit cards as monopoly money,’ said Zurita-Jackson, who has paid off $30,000 in the six months since abandoning credit. She now relies on cash and a debit card.” HPS ANALYSIS: Buy Now – Pay Later and zero percent financing are replacing credit cards in an attempt to keep consumers spending, but as this article points out, American consumers are reining themselves in and buying only what they need with cash or a debit card. While good for consumers, this “reining in” relative to spending is bad for retailers and brands. The remaining four months of 2025, including the holiday selling season, should tell the tale, or at least help clear up some of the uncertainty.

08 17 25: “Electric bike education enters U.S. schools, but in the last state you’d expect.” electrek: “Electric bike and scooter safety is now part of the curriculum in some schools and, surprisingly, it’s happening in Florida. Yes, Florida. The state that’s better known for keeping education out of schools, banning everything from books to the word ‘gay.’ But now, a Central Florida nonprofit is stepping in to make sure students are at least learning how to ride responsibly. The group Best Foot Forward for Pedestrian Safety has partnered with local police departments and Orange County Public Schools to bring e-bike and e-scooter safety programs directly into middle schools and high schools. The initiative is focused on addressing the growing number of crashes and injuries involving students riding electric two-wheelers. The safety course covers basics like wearing helmets, obeying traffic laws, and making yourself visible to drivers — skills that are important for the many young riders who are increasingly taking to electric bikes as a form of independent transportation around their cities and neighborhoods. One of the main topics of the program is said to be speed management. The program addresses the importance of keeping speeds reasonable and the impacts of faster riding. Like much of the U.S., Florida has seen a surge in e-bike and e-scooter popularity among kids and teens, especially in suburban and coastal areas. While many embrace them as a fun and fast way to get around, the sudden rise has also come with a worrying spike in injuries and deaths, prompting calls for improvements in both infrastructure and education. With e-bike usage exploding across the U.S., more schools and communities are exploring steps to increase rider education. It’s a sign that America’s transportation habits are changing – and our education systems are beginning to catch up.” HPS ANALYSIS: E-bike education in all shapes and forms, as long as it is factually correct, is long overdue and welcome. As the HPS Chief Technical Officer Mike Fritz has repeatedly explained, the bicycle industry was not prepared for the sudden surge in demand for e-bikes, and has fallen way behind the curve in both the public’s education and understanding about e-bikes and lithium-ion batteries. This lack of education and understanding extends to public officials, legislators, and regulators, and the state of Florida is to be commended for being a champion for education about e-bikes and lithium-ion batteries in its public school system. 

08 18 25: “New ruling will add steel tariff costs to imported e-bikes and trainers.” Bicycle Retailer and Industry News: “The steel used in e-bikes, indoor trainers, exercycles, and some hand tools, is now subject to the Trump administration's Section 232 tariffs, which are up to 50 percent. An unpublished notice from a Department of Commerce bureau lists hundreds of HTUS import codes for steel derivative product categories that are now subject to the tariff. The list includes 8711.60.00, the import code that applies to e-bikes (as well as to e-cargo bikes and electric motorcycles), and 9506.91.00, which in the past has been applied to exercise bikes and fluid trainers, according to a PeopleForBikes guide to HTUS codes used in the industry. The new list also includes hand tools like pliers and hex keys, and ball bearings and roller bearings that the bike industry imports. Most of the new codes are for industrial tooling, tractors, and some electronic parts, as well as some household appliances. The steel content of these products will be subject to the 50 percent tariff if imported from most nations, 25 percent if imported from the United Kingdom. The steel content is not subject to reciprocal tariffs, but the full value of the import is subject to other tariffs in place. ‘In the case of China, the entire value of an e-bike is also subject to 25 percent 301 tariffs and 20 percent IEEPA fentanyl tariffs, just not the 10 percent reciprocal tariff currently in place under the 90-day pause,’ said Matt Moore, PeopleForBikes' policy counsel. The steel tariff applies unless the steel was melted and poured in the U.S. and assembled elsewhere. The list was made public Friday as an unpublished notice in the Federal Register. It is set to be included in the full Federal Register being published Tuesday. The new tariffs took effect at 12:01 a.m. Monday. Most e-bikes have aluminum or carbon fiber frames, but a few brands import steel-framed e-bikes, including Marin, Benno, Schwinn, and Brompton. (Brompton, which manufactures in the U.K., presumably would pay a 25 percent tariff.) Some electric cargo bikes from Yuba, Surly, Xtracycle, and Bunch Bikes also have steel frames. Some importers have told BRAIN that their factories itemize the material costs of their products on invoices, with a separate line item for value added by labor. Then the importer pays the steel and/or aluminum tariff only on the material cost, which is much smaller than the cost of an entire frame, for example. However, other importers said they expect to pay the tariff on their cost for the steel product, be it a frame or a bolt. Importers were seeking answers on Monday. ‘The question now is how granular we will need to go,’ said Matt VanEnkevort, president and CEO of Marin Bikes. ‘For instance, can we report the frame and fork content, or do we need to get down to the level of hardware (derailleur pivots, motor internals, battery mounts, water bottle bolts, etc),’ he asked.” HPS ANALYSIS: BRAIN is to be complimented for its detailed coverage of this new tariff, and for making every effort to bring clarity to this new tariff. While this current Section 232 tariff is only on steel content, similar tariff rulings are expected on aluminum and copper content. The question from the CEO of Marin Bikes about “how granular we will need to go” is very pertinent. HPS has been advised that at least one leading brand is actually weighing all of its components to determine as accurately as possible the exact steel content of each of its SKUs, and so it has a record of aluminum and copper content for future use. Make no mistake, this is a difficult and expensive tariff compliance process that has been knowingly implemented.

08 19 25: “This customs curveball is changing the game.” Bloomberg Supply Lines: “After years of chaotic trade wars and pandemic supply disruptions, it’s hard to rattle American freight carriers, cargo owners, and all the middlemen that keep international commerce moving through the world’s largest economy. This past weekend, though, the stress was more palpable than usual across social media platforms where the U.S. logistics crowd likes to vent. The target of their fuming: a notice late Friday from the Customs and Border Protection agency that more than 400 additional items would be included on steel and aluminum tariff lists, effective Monday. No exceptions were granted for anything already in transit. For many customs brokers and trade compliance professionals, an August weekend was consumed by the latest onslaught of HS codes for products that would now qualify for the 50 percent sectoral duties. ‘This Customs Curveball is changing the game,’ Brian Baldwin of Kuehne + Nagel wrote on LinkedIn. ‘This isn’t just another tariff — it’s a strategic shift in how steel and aluminum derivatives are regulated.’ Even those hesitant to editorialize didn’t hold back. ‘It’s become increasingly obvious to me that the current administration is not so much interested in reshaping trade as it is intent on sabotaging it,’ wrote Eric Johnson, director at S&P Global and senior technology editor at JOC.com. ‘These actions are not about righting trade unfairness. It’s about making the job of importing insanely difficult, if not downright impossible.’” HPS ANLAYSIS: From what HPS has been able to confirm over the last two weeks or so, the import specialists quoted in this article are correct. The Section 232 tariffs on steel and aluminum content are purposefully difficult to confirm, document, and comply with. Commerce Secretary Howard Lutnick has said as much, and HPS has to wonder about the administration’s seemingly total lack of understanding of both manufacturing in the U.S. and the extreme difficulty associated with reshoring a product that has not been manufactured in the U.S. in decades. It can be done, but only if the U.S. government makes it financially attractive for component manufacturers to build factories in-country to support bicycle and e-bike manufacturing facilities, and the commitment by the government is long-term, at least ten years. Without this kind of commitment, “ … making the job of importing insanely difficult” is counterproductive and will only serve to unnecessarily snuff out more American businesses.  

08 20 25: “FDNY responds to fire at illegal battery repair business.” Bicycle Retailer and Industry News: “Firefighters extinguished a lithium-ion battery fire Sunday in the cellar of a Queens home operating as a battery repair business, according to the Fire Department of New York. About 100 lithium-ion batteries in various states of disassembly were on fire when the FDNY arrived at 164-18 Pidgeon Meadow Road. No injuries were reported. FDNY Haz-Mat units removed about 600 battery cells from the location. The FDNY Bureau of Fire Prevention issued a summons to the owner for illegal storage of e-mobility devices. Additionally, an FDNY summons was also issued against the property owner for miscellaneous fire code infractions. As of Monday, the FDNY has responded to 172 lithium-ion battery fires this year, five more than this time last year, officials said. In 2023, the City Council's lithium-ion battery safety package was signed into law, prohibiting the sale of e-bikes and other powered mobility devices if their batteries don't meet UL certification. HPS ANALYSIS: This shows the FDNY and the City of New York are winning, but have not yet won, in the battle against dangerous, non-compliant lithium-ion batteries and illicit retailers illegally charging large quantities of such batteries. Without knowing the circumstances, what HPS has seen and read indicates that a disastrous fire that could have burned down the whole building and perhaps the whole block, was averted by the FDNY finding and removing approximately 600 battery cells from the location. New York City is working very hard on education, and that may be the reason a disaster was averted, but this incident points out why more education is called for.

08 21 25: “Walmart says tariff costs are rising 'each week' and will continue.” National Public Radio npr: “Walmart says it has been able to mitigate many of the tariff costs so far, but they are rising ‘each week’ and will continue to do so through the rest of the year. The world's largest retailer, like many others including Home Depot and Target, has had to raise prices on some items, while keeping prices down on others. Walmart says its top back-to-school products were even cheaper this year than last year. Still, the Trump administration's tariffs on virtually all imports loom large for all retailers who are seeing the cost of goods rise. Previously, when President Trump was threatening tariffs up to 145 percent on Chinese imports, Walmart drew his ire by saying that it would lead to higher prices. On Thursday, Walmart CEO Doug McMillon said his company's costs keep climbing: ‘We've continued to see our costs increase each week, which we expect will continue into the third and fourth quarters,’ he said on an earnings call. Walmart continues to attract more higher-income shoppers looking for deals, McMillon said. And where some items did go up in price, middle- and lower-income customers in particular sometimes switched or skipped those purchases. But broadly, he said, tariffs haven't prompted ‘dramatic shifts’ in shopping behavior. ‘The impact of tariffs has been gradual enough that any behavioral adjustments by the customer have been somewhat muted,’ McMillon said. Overall, shoppers keep spending at stores and restaurants. Walmart's sales in the U.S. grew 4.6 percent in the latest quarter. Home Depot on Tuesday said its U.S. sales in the three months that ended August 3, rose 1.4 percent, which was much more than earlier this year. The home-improvement chain said people have moved on to smaller projects, while delaying major renovations, largely out of worry about where the economy is headed. Retailers and manufacturers have so far avoided major price increases for two main reasons: tariffs rolled out much slower than originally threatened, and companies have stockpiled goods ahead of time. This week, TJX, the parent company of discount clothing stores T.J. Maxx, Marshalls, and HomeGoods, said it had bought up more inventory than usual to be well-stocked for months.” HPS ANALYSIS: Walmart is not only the “world’s largest retailer,” it is also the largest retailer of bicycles in the U.S.. Accordingly, there are at least three points made in this article that are applicable to the rest of the American bicycle business. First, Walmart, like all other retailers of bicycles, had to raise prices on some items, while keeping prices down on others. Second, tariffs rolled out more slowly than originally threatened and, third, importers brought in and stockpiled goods ahead of time. This latter point, HPS believes, is going to be problematic between now and the end of the year as uncertainty keeps importers from placing orders and replenishing inventory in a timely manner, leading to stock-outs and potential shortages of some SKUs going forward into 2026. 

08 24 25: “American businesses in survival mode as Trump tariffs pile up.” The New York Times: “After fighting in the Vietnam War, Richard May returned to America and enrolled in business school, where an economics class made a big impression on him. He learned about the British economist David Ricardo’s 19th-century theory of comparative advantage, the idea that a nation should specialize in what it does best and trade with others for everything else. He started his own business in 1990, designing medical treatment beds and garage doors in the United States. Applying Ricardo’s ideas, Mr. May used manufacturers in Asia to turn his blueprints into products.  This model worked well for Mr. May’s company, MFG Direct USA, for the better part of 35 years. But this year, amid President Trump’s barrage of tariffs, he feared that his company might not survive another 60 days. To bring his garage doors into America from China, he now had to pay an 83 percent tax to the U.S. government, a compilation of four different existing and new tariffs. Mr. May, 78, said he went into ‘survival mode.’ He laid off staff and cut expenses drastically. His team worked 12 hours a day trying to find new customers. He made it through the shock, but the business is facing big challenges. ‘We’re hanging on by a thread,’ he said. ‘We’ve been doing everything possible. We’re working harder just to stay in business.’ Just over six months into Mr. Trump’s campaign to rebalance global trade, some American small businesses are already on the brink. Others have chosen to throw in the towel. Last week, the United States and China agreed to extend, by another 90 days, a pause on tariffs that would have soared to a catastrophic 145 percent, averting a worst-case scenario, a complete halt of trade between the world’s two largest economies. Though even higher tariffs are on pause, the minimum U.S. duty on goods from China is 30 percent. But the pause has done nothing for many American small-business owners paying the tariffs it left in place, such as a minimum 30 percent duty for goods from China or a 50 percent import tax on products made from foreign steel and aluminum. The average effective U.S. tariff rate soared to 18.6 percent in early August, the highest level in more than 90 years, from 2.5 percent when Mr. Trump took office in January, according to the Budget Lab at Yale, a research center. Many businesses stockpiled key supplies and components ahead of the tariffs, but the full effect of the import taxes is becoming more apparent as those reserves dwindle, dealing a final blow to some companies already struggling with other challenges. Howard Miller, a family-owned manufacturer of handcrafted clocks and home furniture based in Zeeland, Mich., said last month that it planned to shut down operations next year after 99 years in business. The company, which employs nearly 200 people at factories in Michigan and North Carolina, said in a statement that it was already grappling with a soft housing market when tariffs hit supply chains and sparked recession fears. ‘Our business has been directly impacted by tariffs that have increased the cost of essential components unavailable domestically and driven specialty suppliers out of business, making it unsustainable for us to continue our operations,’ said Howard J. Miller, the company’s chief executive and grandson of its founder. In July, Jennifer Bergman, 58, closed West Side Kids, a toy store in New York City, founded by her mother 44 years ago. She said that operating a toy shop in the age of Amazon was already difficult, but that the tariffs made it impossible to go on. The prices for everything from her best-selling scooters to inexpensive knick-knacks went up, and she spent most of her days dealing with price increases. She also said she found that people were more hesitant to spend because they feared the effect of tariffs on the economy. As Ms. Bergman looked at her finances in June, she realized that she would struggle to make rent in July. She said sales representatives from toy brands had told her that other shops were struggling, too. ‘They think I’m the first to fall, but that others are going to follow,’ Ms. Bergman said. HPS ANALYSIS: HPS wants to point out that this article hasn’t been included just to take a shot at the president. There are more stories in this article, but what has been included points out very clearly that small businesses, like bike shops, are the backbone of our industry and our country, and these tariffs unfairly target them. It also points out that the small businesses, those generating less than $1 million annually in revenue, are going to have to stand up and speak out through trade associations like the National Bicycle Dealers Association (NBDA).  

08 26 25: “Major e-bike maker hits pause on U.S. imports after new tariffs.” electrek: “In a move that underscores the growing instability in international e-bike trade, premium electric bike maker Riese & Müller has paused all e-bike shipments to the United States, citing unpredictable steel tariffs as the final straw. The German brand, known for its high-end urban and cargo e-bikes, informed U.S. dealers this week that it is halting exports for the foreseeable future. While the company pointed to the recent reinstatement of a 50 percent tariff on certain steel components from overseas, including Germany, the broader issue here seems to be the chaotic and ever-shifting tariff landscape surrounding e-bike imports. ‘We need to take a few days to carefully evaluate this situation and its implications before proceeding with further steps,’ explained the company in an email to its dealers in the U.S., according to Bicycle Retailer. This isn’t the first time tariffs have disrupted the flow of electric two-wheelers into the U.S.. The Trump administration’s Section 301 tariffs targeting Chinese goods initially shook up the industry during the administration’s first term, hitting Chinese-made e-bikes and components with 25 percent duties before being temporarily suspended. Those tariffs whipped back and forth as exclusions came and went, then became a double whammy after the Trump administration’s ‘reciprocal’ tariffs added even more hardships to e-bike importers in the U.S.. And now, as of July 1, additional steel tariffs have expanded the uncertainty. What’s unusual in Riese & Müller’s case is that most e-bikes, even expensive ones, use relatively little steel compared to aluminum. Frames, forks, wheels, and most structural components are increasingly made from aluminum alloys or carbon fiber. But with the tariff code system as vague and inconsistently enforced as it is, it seems R&M simply doesn’t want to take the risk of unexpected import costs, or the administrative mess that comes with it, including having to account for how much of a bike is produced from steel components and what the value of those components proves to be. The impact on the U.S. market will likely be minor in volume. Riese & Müller is a premium but somewhat boutique brand with a loyal yet small customer base. Still, this is a canary in the coal mine. If even premium brands are choosing to step away from the U.S. market over tariff unpredictability, what happens when larger, mass-market brands start running into similar issues? For now, dealers in the U.S. are being told to sell through existing stock and not take additional orders until the company can determine whether it will be able to continue importing e-bikes into the U.S.. But if the trade war tariffs continue, this may not be the last premium brand to throw in the towel – at least temporarily.” HPS ANALYSIS: “…this is a canary in the coal mine.” This is what stuck out to me about this article. Riese & Müller, as this article states, is not a big volume brand, but it does represent a high-end e-bike product from Europe that doesn’t have all the tariff problems attached that comes with e-bikes imported from China. However, the Section 232 steel tariff that we covered earlier is intended to be difficult and to discourage importers. In this case, it has succeeded.

08 27 25: “Trump slaps India with 50 percent tariffs, upending ties with Modi.” Bloomberg: “President Donald Trump imposed a crushing 50 percent tariff on Indian goods to punish the country for buying Russian oil, upending a decades-long push by Washington to forge closer ties with New Delhi. The new tariffs, the highest in Asia, took effect at 12:01 a.m. in Washington on Wednesday, doubling the existing 25 percent duty on Indian exports. The levies will hit more than 55 percent of goods shipped to the U.S. — India’s biggest market — and hurt labor-intensive industries like textiles and jewelry the most. Key exports like electronics and pharmaceuticals are exempt, sparing Apple Inc.’s massive new factory investments in India for now. The move marks a sharp deterioration in ties for the two nations and an about-turn in Washington’s strategy over the years to court India as a counterweight to China. Trump has slammed India for buying Russian oil, which he said was funding President Vladimir Putin’s war in Ukraine. New Delhi has defended its ties with Russia and has called the U.S.’s actions ‘unfair, unjustified, and unreasonable.’ The sky-high tariffs threaten India’s export competitiveness against rivals like China and Vietnam, while raising questions about Prime Minister Narendra Modi’s ambitions to transform the South Asian nation into a major manufacturing hub. Exporters of clothing, footwear, and small manufactured goods like toys, are bracing for falling orders and possible job cuts. ‘This is going to be a very big impact on Indian exporters because 50 percent tariffs are not workable for the clients,’ said Israr Ahmed, managing director of Farida Shoes Pvt. Ltd., which depends on the U.S. for 60 percent of its business. He says buyers have asked exporters to share specifications of goods with suppliers in other nations, increasing the threat of orders being diverted to countries like Bangladesh and Vietnam. India’s Ministry of Commerce and Industry didn’t respond to a request for comment on Wednesday. The tariffs have stunned Indian officials, and follow months of trade talks between New Delhi and Washington. India was among the first countries to open trade talks with the Trump administration, but its own high tariffs and protectionist policies in sectors such as agriculture and dairy have frustrated US negotiators.” HPS ANALYSIS: Let’s set Russian oil and Indian agriculture aside and concentrate on the bicycle and e-bike business. One of the two domestic manufacturers mentioned in an earlier article was, according to HPS’s research, planning to import frames and forks from India. That made sense to HPS before August 27. India’s bicycle frame and fork manufacturing is good and meets world standards at competitive FOB prices. Transportation from the center of Indian bicycle and e-bike manufacturing in North Western India is available with a good to adequate port for export. India was one of the source countries HPS had on its list of potential OEMs to replace China before the U.S. imposed 50 percent tariffs. Depending on what India and the U.S. negotiate about Russian oil and Indian agriculture, if they negotiate, will determine if India goes back on the HPS list of potential source countries for bicycles and e-bikes.

08 29 25: “Appeals court strikes down Trump’s tariffs as illegal but leaves them in place.” The Washington Post: “President Donald Trump’s cornerstone economic policy was dealt another setback Friday when a federal appeals court ruled he did not have the authority to impose most of his sweeping tariffs on imports from dozens of trading partners. Trump’s tariffs will be allowed to remain in effect for now, to allow time for a possible appeal to the U.S. Supreme Court. The U.S. Court of Appeals for the Federal Circuit upheld a lower court’s decision that Trump overstepped his authority in using a 1977 law, called the International Emergency Economic Powers Act, or IEEPA, to impose most of his tariffs. The emergency law is used in the case of threats against the country. ‘The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax,’ a group of federal judges wrote in their ruling. The decision throws the future of Trump’s foundational economic policy into uncertainty once more, just weeks after the president announced increased levies on more than 60 countries around the world. Those tariffs spared many countries from even higher levels first proposed by Trump in April, but still added much higher taxes than the country has imposed in recent decades. Trump posted on Truth Social Friday, criticizing the decision, writing that a ‘Highly partisan Appeals Court incorrectly said that our tariffs should be removed, but they know the United States of America will win in the end. If these Tariffs ever went away, it would be a total disaster for the country.’ The legal challenge was brought by a group of state governments and small businesses who argued, in part, that no such emergency exists to justify Trump using the law. The Trump administration has disputed this, pointing to an executive order Trump signed earlier this year declaring the trade deficit a national emergency. The Justice Department is expected to appeal the ruling to the Supreme Court, meaning the issue could drag on for months before a resolution is reached. Tariffs have been allowed to remain in effect in the meantime, despite a lower-court ruling them illegal, due to a stay while proceedings continue. Trump’s tariff policy is based on his belief that the U.S., the world’s largest economy, has been taken advantage of by trading partners who operate in a trade deficit with the country. The president has pledged the levies will bring a ‘Golden Age’ back to the country’s manufacturing. But the tariffs have been controversial among economists and trading partners. Tariffs are taxes that U.S. importers pay, and those costs are often passed on to the businesses and consumers who buy the goods. As a result, many view such tariffs as taxes on end users. The U.S. economy is already starting to feel the effects of the policies, with a weaker-than-expected labor market revealed last week and consumers pulling back on spending, as companies and Americans evaluate the uncertainty of the policies. HPS ANALYSIS: On Friday, August 29, a U.S. Appeals Court ruled, in a 7-4 decision, that most tariffs issued by the executive branch are illegal, but the ruling will not take effect until October 14 to give the administration time to ask the Supreme Court to take up the case. The Appeals Court ruling came in response to two lawsuits, one of which was filed by small businesses, including Terry Precision, a women’s cycling clothing company, and the other by a coalition of 12 states. Since the Appeals Court did not halt the current U.S. tariffs, they will continue to be assessed and collected by U.S. Customs until at least October 14, pending action by the Supreme Court that could set new dates relative to a final decision in this case. The bicycle business, like all U.S. businesses, large and small, is going to be subject to more uncertainty going into the fourth quarter of 2025. What happens next? It is highly likely the administration will file an appeal with the Supreme Court. In the unlikely event the Supreme Court does not take up the case or takes up the case and rules against the administration, the ‘reciprocal’ tariffs will be illegal as of October 14 and will trigger the questions over whether the U.S. will have to pay back billions of dollars that have been collected illegally on products from countries that have been paying them over the past few months. In the more likely event that the Supreme Court does take up the case and rules for the administration, the ‘reciprocal’ tariffs will be affirmed as legal and will continue in full force and effect. Note: Section 301 and Section 232 tariffs on steel, aluminum, and copper were brought in under different presidential authority and remain intact and unaffected by the court rulings. HPS urges affected companies to consult with their business advisors, customs brokers, and suppliers in their respective source countries to develop the best plans they can to deal with the uncertainty of the probable scenarios. Specialty bicycle retail members are urged to contact their business advisors and supplier companies to get the best, most current assessments of product availability and pricing going forward, and to update business plans accordingly.

08 29 25: “The cost of ordering packages from overseas is jumping today following the end of the U.S.’s de minimis tariff exemption just after midnight.” The Wall Street Journal Logistics Report: “The Wall Street Journal’s Esther Fung writes that FedEx, UPS, and other parcel carriers are bracing for the added workload of collecting new duties and for confusion among customers hit with unexpected bills. Many postal services in Europe and Asia stopped shipping e-commerce packages to the U.S. altogether ahead of the end of duty-free treatment for parcels worth $800 or less.  The tariff cost will now depend on the country of origin, the type and value of the product, and whether the package is sent through a post office or a commercial parcel carrier. The tariff bill could cost more than the item itself, especially if the product contains steel, aluminum, or copper components. HPS ANALYSIS: “The wicked Witch is dead!” The de minimis tariff exemption is no more, and parcel shipments into the U.S. have declined by 80 percent. HPS has never believed that the de minimis tariff exemption was the source of any appreciable number of complete e-bikes. However, we do believe that de minimis was responsible for an appreciable quantity of low-cost and potentially dangerous lithium-ion batteries and, accordingly, this source has been eliminated.

09 03 25: “U.S. tightens trade fraud rules.” Sea Trade Maritime News: “The creation of a Trade Fraud Task Force to prosecute tariff evasion through transshipment is expected to further restrict U.S. imports from Asia. A $12.4m settlement under the False Claims Act in mid-August, the result of a Texas-based company and its president allegedly evading duties on imports from China, is a signal for shippers to be wary of the new Trade Fraud Task Force. In May this year, acting assistant attorney general Matthew Galeotti identified ‘trade and customs fraud, including tariff evasion’ as a priority for corporate enforcement. Law firm Paul Weiss warned: ‘In the latest signal that the Department of Justice (DOJ) is prioritizing enforcement of tariff evasion, on August 29, the DOJ announced the creation of a new ‘Trade Fraud Task Force’ to ‘aggressively pursue enforcement actions against any parties who seek to evade tariffs and other duties.’ Paul Weiss pointed out that the White House has not given any further guidance on what the administration would consider to be transshipment, a key term for tariffs. ‘The Executive Order (from 31 July) did not define ‘transshipment’ and, to date, CBP has not issued further guidance on this new tariff. Ordinarily, an import from multiple countries would be assessed under a country-of-origin framework that focused on whether a ‘substantial transformation’ of the product took place in the final country in the supply chain,’ said the law firm. On the same day as the trade fraud task came into being, the de minimis rules ended, rules which exempted small packages from tariffs. The White House is intensifying its policies on import duties with the expectation that the volumes into the U.S. from Southeast Asia and China will be significantly impacted. Global Shippers’ Forum (GSF) director James Hookham told Sea Trade Maritime News that the new tariff regimen will settle in the coming months and that shippers require that stability. ‘With reciprocal tariffs now announced for most countries everyone knows what they need to pay and whether it is still worth exporting to the U.S.,’ said Hookham, who went on to say that the market will find its new, higher, level over the coming months as U.S. prices stabilize. ‘Many companies are working on a U.S. plus one, two or three partners, but they need Chinese tariffs to be settled,’ added Hookham. However, the task force will make this kind of move riskier.” HPS ANALYSIS: This is very interesting and in addition to wondering who the Texas-based company is that just paid a $12.4m settlement under the False Claims Act, HPS will warn its clients about the creation of the Trade Fraud Task Force to prosecute tariff evasion through transshipment. The USTR still has not confirmed the details of ‘transshipment’ and the extension of the penalty attached to Vietnamese exports deemed to be transshipments from China to all Asian countries of origin. However, this new Trade Fraud Task Force would seem to be enough confirmation to issue a warning.  

09 04 25: “Trump asks Supreme Court to reverse tariffs ruling finding them illegal.” National Public Radio npr: “The Trump administration took the fight over tariffs to the Supreme Court on Wednesday, asking the justices to rule quickly that the president has the power to impose sweeping import taxes under federal law. The government called on the court to reverse an appeals court ruling that found most of President Donald Trump's tariffs are an illegal use of an emergency powers law. It's the latest in a series of Trump administration appeals to a Supreme Court he helped shape, and one that is expected to put a centerpiece of the president's trade policy before the justices. The U.S. Court of Appeals for the Federal Circuit left the tariffs in place for now, but the administration nevertheless called on the high court to intervene quickly in a petition filed electronically late Wednesday and provided to The Associated Press. It was expected to be formally docketed on Thursday. Solicitor General D. John Sauer asked the justices to take up the case and hear arguments in early November. ‘That decision casts a pall of uncertainty upon ongoing foreign negotiations that the president has been pursuing through tariffs over the past five months, jeopardizing both already negotiated framework deals and ongoing negotiations,’ he wrote. ‘The stakes in this case could not be higher.’ But the stakes are also high for small businesses battered by tariffs and uncertainty, said Jeffrey Schwab, senior counsel and director of litigation at the Liberty Justice Center. ‘These unlawful tariffs are inflicting serious harm on small businesses and jeopardizing their survival. We hope for a prompt resolution of this case for our clients,’ he said. The businesses have twice prevailed, once at a federal court focused on trade, and again with the appeals court's 7-4 ruling. Their lawsuit is one of several challenging the tariffs and erratic rollout that have shaken global markets, alienated U.S. trading partners and allies and raised fears of higher prices and slower economic growth. But Trump has also used the levies to pressure the European Union, Japan and other countries into accepting new trade deals. Revenue from tariffs totaled $159 billion by late August, more than double what it was at the same point the year before. Most judges on the U.S. Court of Appeals for the Federal Circuit found the 1977 International Emergency Economic Powers Act, or IEEPA, did not let Trump usurp congressional power to set tariffs. The dissenters, though, said the law does allow the president to regulate importation during emergencies without explicit limitations. The ruling involves two sets of import taxes, both of which Trump justified by declaring a national emergency: the tariffs first announced in April and the ones from February on imports from Canada, China and Mexico. The Constitution gives Congress the power to impose taxes, including tariffs. But over the decades, lawmakers have ceded authority to the president, and Trump has made the most of the power vacuum. Some Trump tariffs, including levies on foreign steel, aluminum and autos, weren't covered by the appeals court ruling. It also does not include tariffs Trump imposed on China in his first term that were kept by Democratic President Joe Biden. Trump can impose tariffs under other laws, but those have more limitations on the speed and severity with which he could act. The government has argued that if the tariffs are struck down, it might have to refund some of the import taxes that it's collected, delivering a financial blow to the U.S. Treasury. HPS ANALYSIS: As was expected, the Trump administration has filed an appeal with the Supreme Court (SCOTUS) asking the justices to rule that the president has the power to impose sweeping import taxes under federal law. The government called on the court to reverse an appeals court ruling that found most of President Donald Trump's tariffs are an illegal use of an emergency powers law. In the event SCOTUS rules against the administration, the “reciprocal” tariffs will be illegal as of October 14 and will trigger the questions over whether the U.S. will have to pay back billions of dollars that have been collected illegally on products from countries that have been paying them over the past few months. In the more likely event SCOTUS rules for the administration, the “reciprocal” tariffs will be affirmed as legal and will continue in full force and effect.

09 04 25: “U.S. bicycle imports tumble as tariff war plays out.” Bike Europe: “The number of bicycles imported into the United States in the first half of 2025 has dropped 25 percent year-on-year. When looking at Q2 specifically, this is a 35 percent drop compared to 2024. The impact of tariffs and trade wars has seen China's relevance as a U.S. bicycle supplier slip considerably. In August, U.S. President Donald Trump signed a new executive order extending the current pause on high U.S. tariffs for Chinese goods. This executive order solidified the most recent U.S.-China trade terms, reducing the 145 percent tariff to 30 percent until at least 8 November, according to industry association PeopleForBikes. High tariff rates now apply to pretty much all Asian imports to the U.S., including bicycles, their components, and accessories. However, China, which has pretty much ruled the roost in terms of supplying bicycles to the U.S. market, is feeling the biggest pinch. Looking at the numbers provided by the U.S. International Trade Commission (ITC), China supplied just over 190,000 units to the US in the month of June. This is an astonishing 74 percent drop compared to the same month last year, which was 740,000 units. Imports from China in Q2 dropped 55 percent compared to 2024. Having supplied almost 9.5 million units in total in 2024, only 2.7 million units have reached U.S. soil in the first half of 2025. As the U.S. rallies to pick up its own manufacturing with brands like Guardian Bikes and eBliss Global announcing new manufacturing facilities this year, the country still very much relies on (Asian) imports to supply the market. Cambodia is gaining ground on China in terms of volume. In the month of June, 160,000 units were registered as coming from Cambodia, an 80 percent increase compared to last year. Significantly, this was a mere 17 percent behind the volume supplied by China, which has previously accounted for upwards of 90 percent of bicycle imports. In total, the Southeast Asian country has supplied 700,000 units in the first half of 2025, having supplied 920,000 units in total last year. Likewise, Taiwan, now considered the third-biggest supplier to the U.S. behind China and Cambodia, saw its imports stabilize in the first half of 2025, at around 200,000 units. Taiwan remains the high-end supplier of bicycles to the U.S., with a similar export value in the first half of 2025 at €120 million. However, the average value per unit imported in Q2 was $692 for Taiwan and $41 for China. The import value coming from China dropped 42 percent in the first half of 2025 compared to the same period last year. HPS ANALYSIS: Regular readers will recall that HPS has advocated for month-over-month and year-over-year comparisons of industry data, as opposed to the industry associations’ practice of rolling years. This article is a good example of why we prefer year-over-year comparisons either instead of rolling years, or in conjunction with rolling years. Also, HPS has advocated for showing import data along with sell-in, retail sales, and inventory data. If you have your September 2025 issue of BRAIN handy, open it to the first page, and you will find Inventory, All Bikes, And Sell-In, All Bikes in dollars, as provided by the industry association. This leads to HPS advocating for always showing units and sales dollars. HPS submits that BRAIN is publishing what they receive, but that the dollar value shown for Inventory, All Bikes, and Sell-In, All Bikes is misleading compared to this Bike Europe article and the U.S. import unit data shown and written about. The U.S. is an import-dependent market, and the number of bicycles imported into the United States in the first half of 2025 has dropped 25 percent year-on-year. When looking at Q2 specifically, this is a 35 percent drop compared to 2024. The uncertainty on display throughout this month’s newsletter is, in all probability, going to add to the drop in U.S. imports during the second half of 2025. Meanwhile, a 25 percent decline in imports year-over-year, even combined with extraordinarily high inventory levels, means a decline in actual market consumption and sales. In short – the U.S. bicycle market is in decline, and reports indicate the same is true for the e-bike segment of the market.

Contact Jay Townley: jay@humanpoweredsolutions.com