Bicycle Retailer

Bicycle Retailer Latest News and Information

24 October 2020

  • Updated tariff timeline: How we got here
    UPDATED Sept. 11, 2019

    BOULDER, Colo. (BRAIN) — Tariff news is piling up on the industry, making heads swirl from Washington to Long Beach to Boulder.

    To help you, and us, keep track, we have prepared a timeline, below. We'll have to keep updating the timeline as things develop. If you have a question, shoot it over to BRAIN’s Steve Frothingham at Sfrothingham@bicycleretailer.com or leave a comment.

    Pre-existing tariffs

    During the Kennedy administration the import duty on bikes was 30%. But in recent years most complete bikes have been subject to an 11% tariff; the rate for most road bikes is half that. Before the new Section 301 tariff imposed last year (see below), e-bikes had no tariff.

    Parts and accessories are generally subject to tariffs between 0-10%. The tariff on pedals, for example, is 8%, while that on pumps is 3.7%. 

    All the new and proposed tariffs in the news in the last year are in addition to the pre-existing tariffs. So for example the new 25% tariff on Chinese bikes, made official this month, is on top of the 11% tariff most bikes already are subject to, for a total of 36%.

    Many missed the news in September 2018, but there was a tariff reduction that month. President Donald Trump signed the Miscellaneous Tariff Bill Act of 2018, which reduced some of these underlying tariffs (in imports from all countries, not just China) without affecting the new Section 301 or Section 232 tariffs. For example, the bill lowered the rate on disc brakes from 10% to 7.5%, and the rate for unicycles went from 3.7% to 0%. It also slightly reduced the tariffs on some cycling shoes. There's more on the MTB on the PeopleForBikes website.

    New and proposed tariffs, in chronological order:


    The U.S. tariff on steel and aluminum

    Applies to: U.S. imports of raw steel and aluminum from most countries
    Rate: 25% on steel, 10% aluminum
    Date proposed: March 8, 2018
    Date applied: March 23, 2018
    Type of tariff: Section 232, related to national security. (There's more on Section 232 tariffs on the Department of Commerce site)

    Annual import value of products, 2018: $40 billion
    Notable exclusions: Steel from Argentina, Australia, Brazil, and South Korea (Argentina, Brazil and South Korea are limited by import quotas); aluminum from Argentina and Australia (Argentina limited by quota). Under NAFTA, Canadian and Mexican materials were exempt until May 31, 2018.
    Impact on our industry: Many U.S. manufacturers tell BRAIN that material costs — even for U.S. made steel and aluminum - have increased significantly. This put them at a disadvantage relative to foreign manufacturers, because only the materials, not completed products, are subject to this tariff. Some U.S. manufacturers favored an increase in tariffs on completed products because it helped reduce that disparity. 
    Status: Mexico and Canada continue to negotiate new trade agreements in hopes of eliminating the tariffs; with a Canada/US deal announced on May 17. The EU and the U.S. also continue to negotiate on this and other trade issues.
    Retaliation: Canada, Mexico, and the European Union each enacted retaliatory measures.

    Section 301, List 1 (GPS and bearings)

    Applies to: U.S. imports of a wide array of Chinese products, including GPS bike computers and ball bearings
    Rate: 25%
    Previous tariffs: GPS: 0%; Bearings: 4-10% depending on type.
    Date proposed: April 6, 2018
    Date enacted: July 6, 2018
    Type of tariff: Section 301 (More on Section 301 on the USTR website)
    Annual import value of all List 1 products, 2018: List 1 represented $34 billion in imports, out of an original proposal of $50 billion. List 2 (below) made up the $16 billion difference.

    Impact on our industry: Caused some GPS makers to move production out of China, usually to Taiwan. Raised costs of U.S.-made components that include Chinese-made bearings, and replacement bearings. Caused some bearing suppliers to move production or assembly out of China.
    Retaliation: China announced its own list of U.S. goods subject to new tariffs.
    Status: Still in place.

    Section 301, List 2 (Chinese e-bikes and motors)

    Applies to: An array of Chinese products, including e-bikes and e-bike motors.
    Tariff rate: 25%
    Previous tariff on e-bikes: 0%
    Type of tariff: Section 301
    Annual import value of all List 2 products, 2018: $16 billion
    Date proposed: June 20, 2018
    Date applied: Aug. 23, 2018

    Impact on our industry: Several manufacturers, including Trek and Pedego, testified against the proposal in Washington. The tariff had more effect on lower-priced e-bikes sold online and other channels. Sales statistics show the e-bike remained the fastest growing segment in the industry, despite the tariffs.
    Retaliation: China announced a second round of U.S. goods subject to retaliatory tariffs.
    Status: Still in place. Bike trade groups and brands requested exemptions, but the USTR denied those requests in January.

    Section 301, List 3 (Chinese bikes, parts and accessories)

    Applies to: Wide array of Chinese products, including most complete bikes and bike parts and accessories, plus other items the bike industry uses and sells, like tools and water bottles. 
    Notable exceptions: Helmets and lights were exempted for safety reasons. Cycling apparel and shoes also are not included. A variety of bike parts and accessories that are not elsewhere specified or included in the HTS import codes (NESOI, in importer jargon) fall under the 8714.99.8000 code. That code was NOT included in this round, but items under that code are subject to a pre-existing 10% duty. This includes about 40 types of products, including pump clips, bike radios and horns, kickstands, wide-angle reflectors, seatposts, toe clips, spoke reflectors and more. HTS 8714.99.8000 is included in List 4 (see below).
    Tariff rate: 10% starting September 2018, was set to increase to 25% on Jan. 1, 2019, but the increase was delayed. Now set to increase to 25% on imports that arrive after June 1.
    Previous tariffs: The 10% and 25% tariffs are in addition to existing tariffs on bike products, discussed above.
    Type of tariff: Section 301
    Annual import value of all products on List 3, 2018: $200 billion.
    Date proposed: July 17, 2018
    Date applied: 10% took effect Sept. 24, 2018. It increased to 25% on May 10, 2019, applying to imports that arrive after June 1.

    Despite the notable exceptions, this is a big, wide ranging list of bike stuff.

    Impact on our industry: Despite the notable exceptions mentioned above, this is a big, wide ranging list of bike stuff. Evidence: In 2018 the bike industry imported at least $1.1 billion in products on this list from China, representing half the industry’s imports. Since September, the 10% tariff has led to wholesale price increases of around 5% on these products, retailers said. Suppliers tell us efforts to re-source products and the uncertainty has been costly. The increase to 25% is expected to cause significant wholesale and retail price increases.
    Retaliation: China is running out of U.S. imports to hit with new tariffs in response. After the U.S.’s 10% increase in September, China announced new tariffs of 5-10% on $60 billion in U.S. exports to the country, including agriculture products and natural gas. After the announced increase to 25% in May, China said it would increase tariffs on $60 billion in other U.S. imports on June 1.
    Status: Negotiations continue.

    Section 301, List 4 — (Almost everything else from China)

    Applies to: U.S. imports of Chinese goods, including most or all of the bike products not included in List 2 or List 3.
    Tariff rate: up to 25%
    Type of tariff: Section 301
    Annual import value of all products on List 4, 2018: $300 billion.
    Date proposed: May 13, 2019
    Date to be enacted: Any time after June 24 in any amount up to 25%, on top of the regular rate of duty.

    Impact on our industry: Adds in most or all bike-related items that were not in List 3, including lights, helmets, unspecified parts and accessories, apparel and footwear. The industry is planning to submit requests to exclude bicycle products from this round of tariffs.

    Status: A public hearing was held June 17 at which the bicycle industry was represented. On June 29, at the G20 summit in Japan, Trump said he and Chinese President Xi had agreed to a truce and that the U.S. would not impose the new tariff on List 4. On August 1, Trump said Xi had not followed through in promises made in June and said List 4 would be hit with a 10% tariff on Sept. 1

    Status update Aug. 13, 2019: Trump announced that some products on List 4 will get a holiday shopping season reprieve and not get hit with the new tariff until Dec. 15. That included cell phones, laptops — and balance bikes. However, all other bike products on List 4 were set to still receive the 10% tariff on Sept. 1. That included helmets and lights, which were exempt from previous rounds for safety reasons. 

    Status update Aug. 30, 2019: The USTR announced the new tariff on List 4 would be 15%, not 10%, after China announced retaliatory measures. The 15% would be imposed on List 4a on Sept. 1 and List 4b on Dec. 15. The USTR also said the 25% tariff on Lists 1,2, and 3 would increase to 30% on Oct. 1, 2019.

    Status update Sept. 11, 2019: Trump tweeted that the increase on Oct. 1 would be delayed until Oct. 15 as a good will gesture.  

    Section 301, EU list

    Applies to: U.S. imports of products from the European Union, including some bike products.
    Tariff rate: Up to 100%
    Type of tariff: Section 301
    Annual import value of all products, 2018: $11.5 billion
    Date proposed: April 8, 2019
    Public hearing: May 15-16, 2019

    Impact on our industry: Applies to imports of EU parts, including sprockets and hubs.
    Retaliation: The EU has proposed retaliation that would include some sprockets and hubs from the U.S.
    Status: Matt Moore, representing the BPSA, was scheduled to speak at a public hearing about this proposal on Thursday, May 16. Comments were being accepted until May 28 at regulations.gov/docket?D=USTR-2019-0003.

    Editor's note: We've corrected our reference to the import duty on bikes during the Kennedy administration. The correct figure is 30%, not 50% as we had said. Thanks to James Longhurst, Ph.D., an associate professor in the history department at the University of Wisconsin La Crosse for nicely pointing out our mistake. 

     

  • Cycle Force's Matt Nims: 'Dealers are willing to roll the dice with second- and third-tier brands'
    Part 12 of BRAIN's Crystal Ball series.

    Editor's note: For a feature in Bicycle Retailer & Industry News, Retail Editor Ray Keener spoke with 14 leaders on the supplier side of the industry. Ray spoke with leaders of major bike brands, component suppliers, e-bike startups, accessory makers and more. We will be running sections of that article online this month.

    BOULDER, Colo. (BRAIN) — It’s been a hectic and unprecedented several months for our industry and many others. Fortunately for our companies and retailers, hectic has meant managing demand rather than fighting for survival.

    Now that the season is waning, inventories are catching up (in some cases) and suppliers are catching their collective breaths, we reached out to a cross-section of suppliers and service providers to get their take on the future.

    Matt Nims, Chief Marketing Officer, Cycle Force Group

    We believe the current demand levels will certainly last through the end of 2020 and that 2021 will be a strong year. Whether "boom" will apply at the end of 2021, we cannot say, but the industry as a whole should be healthy if inventory levels can replenish quickly enough.

    Lead times today are as bad as they have ever been. Raw materials suppliers slow down the parts makers, the parts makers slow down the assemblers. Shipping companies are at maximum capacity and freight rates have risen 15-20%.

    In the short term, we are selling whatever we have. I think dealers are more willing to roll the dice with second- and third-tier brands, knowing what a challenge inventory will be for the next six to 12 months.

    We're seeing growth at both ends of the price spectrum, but we don't know if this is because people are willing to spend more on a bike, or if they cannot get a more economical bike, so they have to go up-range.

    At the same time, we have IBDs trying entry-level product as well. When a retailer like Walmart who sells around 8 million bikes a year is largely out of stock, that is a big opportunity for the IBD.

    Additionally we are moving out inventory like warranty parts that have gathered dust, but still have value to the IBD. The 26-inch, 21-speed bike has made somewhat of a comeback if only because of lack of new inventory availability.

  • Thule rides bike boom to 45% sales growth in Q3

    STOCKHOLM (BRAIN) — Thule Group's third-quarter net sales rebounded with a 44.9% increase year-over-year following two previous quarters of decline.

    Sales for the third quarter ending in September were SEK 2,436 million ($278 million), up from SEK 1,682 million ($192.1 million) from the third quarter 2019. Adjusted for exchange rate fluctuations, sales increased 52.4%.

    The COVID-19 pandemic caused Thule's sales to decrease 4.9% in the first quarter and 11.6% in the second quarter.

    "As I communicated in connection with the second-quarter report, we hoped to be able to recover the lost spring season during the summer, and to continue to ride the strong global bike trend that commenced during June," said Magnus Welander, Thule CEO and president. "This was precisely what happened during the third quarter."

    Third-quarter operating income was SEK 596 million ($68 million), 140% increase year-over-year. Net income was SEK 449 million ($51.3 million), a 149% year-over-year increase. Earnings per share were SEK 4.32 ($0.49) compared to SEK 1.75 ($0.20) a year ago.

    Welander said in addition to bike products, sales in the Americas were boosted by rooftop tents and strollers.

    For the first three quarters of this year, Thule's net sales were SEK 6,223 million ($710 million), an increase of 6.8% over last year at this time.

    Thule's corporate headquarters is in Stockholm. Its stock is traded on OTCMKTS under the THULE symbol. Thule stock quote at Marketwatch.com.

  • Santini's Steve Medcroft: 'Lifts in demand are happening at all levels.'
    Part 11 of BRAIN's Crystal Ball series.

    Editor's note: For a feature in Bicycle Retailer & Industry News, Retail Editor Ray Keener spoke with 14 leaders on the supplier side of the industry. Ray spoke with leaders of major bike brands, component suppliers, e-bike startups, accessory makers and more. We will be running sections of that article online this month.

    BOULDER, Colo. (BRAIN) — It’s been a hectic and unprecedented several months for our industry and many others. Fortunately for our companies and retailers, hectic has meant managing demand rather than fighting for survival.

    Now that the season is waning, inventories are catching up (in some cases) and suppliers are catching their collective breaths, we reached out to a cross-section of suppliers and service providers to get their take on the future.

    Steve Medcroft, Managing Partner, Santini

    My guess is that this boost we're seeing will be more like the "Lance Effect": Bring new people to cycling and a decent percentage will stick with us after the reason for them to take up cycling has gone. The longer people ride, the more likely they will become lifelong participants.

    Our day-to-day business activity has changed. We see a healthy online business and lots of new customers to hopefully make a good impression on. Our growth is coming right across our lines — lifts in demand are happening at all levels in our collections evenly.

    We've transitioned to online and phone interactions with dealers. We ship samples when requested now, rather than travel in person. We've re-focused our marketing outreach and work processes on making these remote interactions a good experience.

    The timing of apparel commitments is different now. We're not asking for six-to-eight month pre-orders. We focus more on short-turnaround production and now ask for pre-orders only four or five weeks ahead of the release dates for new collections.

    We also had to change the timing of collections, delaying some releases tied to events that were no longer happening, and releasing an off-road collection earlier than planned to support high demand online.

    We run our own factory in Italy, so the supply chain is operating well. Except for a two-week period early in the pandemic when all businesses needed to close, we've been able to operate at normal timelines and deliver product reliably.

  • Kuat's Luke Kuschmeader: 'If we can maintain 20% of this new interest we'll be doing great.'
    Part 10 of BRAIN's Crystal Ball series.

    Editor's note: For a feature in Bicycle Retailer & Industry News, Retail Editor Ray Keener spoke with 14 leaders on the supplier side of the industry. Ray spoke with leaders of major bike brands, component suppliers, e-bike startups, accessory makers and more. We will be running sections of that article online this month.

    BOULDER, Colo. (BRAIN) — It’s been a hectic and unprecedented several months for our industry and many others. Fortunately for our companies and retailers, hectic has meant managing demand rather than fighting for survival.

    Now that the season is waning, inventories are catching up (in some cases) and suppliers are catching their collective breaths, we reached out to a cross-section of suppliers and service providers to get their take on the future.

    Luke Kuschmeader, President, Kuat Racks

    We see the boom continuing, the question is at what level and at what point will the demand flatten. We sure haven't seen it yet despite the fact that we usually slow down this time of year.

    Comparing 2020 to last year, if we had the inventory we needed, sales would be way higher. Like many others, sales were down in March and April, then demand picked up. It's been challenging to catch up and we're looking to finish the year with double-digit growth. If we as an industry can maintain 20% of this new interest we'll be doing great.

    We're currently six to eight weeks back-ordered on every core SKU we have. Our primary factories in China and Taiwan have been really good. It's been tough for them having to double capacity and output.

    We've started rolling out our pre-season program to retailers and the response has been very good. Dealers clearly understand the situation so they're willing to commit because they know they need to.

    As far as our product mix, we're going to adapt to the demand as we see that shifting. Our mid-tier products have seen the most growth, such as our NV 2.0 flagship product at $598 retail.

  • Athlos' Dave Manchester: 'Ridership has exploded'
    Part 9 of BRAIN's Crystal Ball series.

    Editor's note: For a feature in Bicycle Retailer & Industry News, Retail Editor Ray Keener spoke with 14 leaders on the supplier side of the industry. Ray spoke with leaders of major bike brands, component suppliers, e-bike startups, accessory makers and more. We will be running sections of that article online this month.

    BOULDER, Colo. (BRAIN) — It’s been a hectic and unprecedented several months for our industry and many others. Fortunately for our companies and retailers, hectic has meant managing demand rather than fighting for survival.

    Now that the season is waning, inventories are catching up (in some cases) and suppliers are catching their collective breaths, we reached out to a cross-section of suppliers and service providers to get their take on the future.

    Dave Manchester, Chief Sales and Marketing Officer, Athlos

    In our community, ridership has exploded across all races and it will continue. It might soften during the colder months as families try and balance remote learning.

    We are watching to see the impact of event planning for 2021 and what changes we need to anticipate. We are also updating our marketing efforts to better communicate the benefits of cycling clothing to the new entrants who are often riding in shorts and t-shirts on high-quality bikes.

    We faced challenges in supply as a result of COVID-related work stoppages, but we're back on track. We have also diversified our supply chain to protect us from any future spikes or new crises. We also pivoted in March and introduced a mask and neck gaiter program. This has become a big part of our business.

    Throughout the crisis sometimes apparel and accessories have been impacted as dealers tried to balance the never-ending line of customers. It's a great opportunity for Q4 holiday gifts and planning for next spring's kick-off events.

    We are seeing opportunities at all levels based on our innovation in our premium products and the assortment available to new entrants. Getting the new cyclist into cycling apparel will help elevate the riding experience and keep them pedaling!

  • SRAM's John Nedeau: 'Our OE customers are planning for the boom to last.'
    Part 8 of BRAIN's Crystal Ball series.

    Editor's note: For a feature in Bicycle Retailer & Industry News, Retail Editor Ray Keener spoke with 14 leaders on the supplier side of the industry. Ray spoke with leaders of major bike brands, component suppliers, e-bike startups, accessory makers and more. We will be running sections of that article online this month.

    BOULDER, Colo. (BRAIN) — It’s been a hectic and unprecedented several months for our industry and many others. Fortunately for our companies and retailers, hectic has meant managing demand rather than fighting for survival.

    Now that the season is waning, inventories are catching up (in some cases) and suppliers are catching their collective breaths, we reached out to a cross-section of suppliers and service providers to get their take on the future.

    John Nedeau, VP OEM Sales, SRAM

    Our OE customers are planning for the boom to last for sure. Orders continue to grow beyond any prior planning guidance. Our OEs are catching up to demand in waves. First, replenish retail inventory including pre-sold bikes, then sell in inventory associated with spring/summer sales. Customers are seeing this trend sustaining well into 2021.

    SRAM is responding by adding capacity as fast as practical. Our lean initiatives in the last three years have allowed us to respond more nimbly through the crisis and now to the unprecedented demand. We are hiring, but the challenge is with shop floor workers being in high demand within the bicycle and electronic industries in Taiwan.

    We’re not changing our product mix, but there’s definitely an emphasis on equipment for bikes selling under $1,500 – which has us lifting capacity for the associated componentry for those bikes.

    We are experiencing balanced growth across the spectrum of price points and application, both MTB and road. Our road business, with the wireless AXS products, is targeted at the above $5,000 retail price points and has been consistently exceeding plans. 

  • CABDA cancels November Disney event, plans virtual event for February

    CHICAGO (BRAIN) — CABDA has postponed its inaugural Industry Summit, planned for early November at Disney World in Florida, to 2021. The show organizer also announced that it will hold a virtual trade event in mid-February, replacing the three or four regional events CABDA usually plans to hold in the winter.

    CABDA director Jim Kersten said he expects to have in-person expos later in 2021.

    "We have been working with all our venues and with the various local governments and health departments to create procedures and policies that keep our attendees and exhibitors safe. This process is incredibly tedious because most large venues have been shut down since March, and their staff have either been re-assigned or furloughed," Kersten said in an email on Friday.

    "At present, none of the COVID precautions taken by the states where our events are held allow for effective gatherings larger than 150 people. And while we expect the situation to improve over the next several months, at present there is too much uncertainty to plan effectively for our original dates," he said.

    Kersten said he's tentatively planning the CABDA ONLINE Virtual Event for mid-February 2021, followed by CABDA MIDWEST in the Chicago area in mid-September, CABDA West near Los Angeles in mid-October, the Industry Summit in Florida in mid-November, and CABDA East in the New York City area early next December. 

    He said CABDA also is launching and expanding digital and print products including podcasts, virtual seminars, and its Pedal Wrench Magazine. 

  • The Bike Co-op's Lindsay Gaskins: 'Every retailer has diversified their offerings'
    Part 7 of BRAIN's Crystal Ball series.

    Editor's note: For a feature in Bicycle Retailer & Industry News, Retail Editor Ray Keener spoke with 14 leaders on the supplier side of the industry. Ray spoke with leaders of major bike brands, component suppliers, e-bike startups, accessory makers and more. We will be running sections of that article online this month.

    BOULDER, Colo. (BRAIN) — It’s been a hectic and unprecedented several months for our industry and many others. Fortunately for our companies and retailers, hectic has meant managing demand rather than fighting for survival.

    Now that the season is waning, inventories are catching up (in some cases) and suppliers are catching their collective breaths, we reached out to a cross-section of suppliers and service providers to get their take on the future.

    Lindsay Gaskins, President, The Bike Cooperative

    While we don't have a crystal ball, we believe that the current boom will last at least through 2020 and into 2021 based on feedback from our retailers across the country.

    Getting exercise by biking will remain a trend for years after the pandemic. While some gyms and fitness centers are opening, people are less inclined to use them as COVID is still a risk.

    There has been growth at both the high- and low-end of the market. With the inventory shortages and increased demand, it's easier to sell higher-end bikes and e-bikes. Another indication of that: we're seeing record usage of our consumer financing program.

    Every retailer we speak to has diversified their offerings in order to keep product on the floor. The general consensus is that customers don't care what the brand on the bike is, they care about the store they are purchasing from.

    Bike retailers seem to be finally out of the reactive mode and are heading into the proactive mode. We're pushing hard for our members to think about targeted marketing to make these new buyers into life-long customers.

    We also think it is a good time to pick up some additional talent for your team as other retailers are so depressed. So we are offering advice to be aggressive in your hiring efforts to make sure you have a strong team for the holiday season and next spring.

  • Forest Service seeking public input into e-bike access

    WASHINGTON (BRAIN) — Following the Department of Interior's lead, the U.S. Forest Service is proposing updates on how e-bikes will be managed and offering a public comment period that ends later this month.

    The Forest Service, which comes under the Department of Agriculture, manages about 25% of federal lands and is not part of the Department of Interior, which approved its e-bike policy proposal earlier this month after a 60-day comment period.

     If adopted, these proposed changes would:

    • Define e-bikes within the three-class system.
    • Mean e-bikes continue to be managed and defined as motor vehicles.
    • Allow land managers to designate e-bike use on non-motorized trails where bicycles are allowed.
    • Encourage land managers to consider whether the effects of e-bike use are comparable to those of traditional bicycle use and consider emerging technologies like e-bikes in future access decisions.

    DOI said land managers can regulate e-bikes the same as traditional bikes on non-motorized lands. The DOI decision affects lands managed by the National Park Service, Bureau of Land Management, U.S. Fish and Wildlife Service, and the Bureau of Reclamation.

    PeopleForBikes, which has championed agencies and land managers to treat e-bikes the same as traditional bikes, wants the Forest Service to remove the "motor vehicle" definition. The comment period, which ends Oct. 26, allows the public to weigh in on all aspects of the proposal. PFB also has drafted letters for submission.