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.
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
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.