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Tariffs hit home for one retailer

Tariffs hit home for one retailer

Bicycles suddenly cost 10 percent more to import from China, will soon cost 25 percent more
Tariffs hit home for one retailer
Richard Himmelwright, owner, of Freemans Bridge Sports in Glenville, is shown with some of his inventory Thursday.
Photographer: Peter R. Barber

GLENVILLE — The hundreds of billions of dollars worth of U.S. tariffs enacted late last month on thousands of Chinese-made items will eventually trickle down to the same two places: American businesses and their customers.

One such place where the rubber hits the road is an independent bicycle shop on Freemans Bridge Road. Bicycle companies are boosting the wholesale price of bikes to cover the 10 percent tariff enacted the Trump administration in late September, and may boost prices again after Jan. 1, when the punitive import duty rises to 25 percent. 

Freemans Bridge Sports informed its customers Wednesday via Facebook that its prices are going up as a result.

Remaining 2018 bikes and the 2019 bikes that the shop took delivery on before the tariffs kicked in will remain at the lower price, owner Rich Himmelwright told The Daily Gazette on Thursday. But the newer models will cost more, starting Oct. 20.

“We've already been contacted by Trek and Specialized,” he said. “We as a dealer, I don't know if there’s too much we can do about it.”

President Trump, who campaigned on a pledge to return manufacturing jobs to the United States, has begun a trade war with China, source of many manufactured goods imported to America. The most recent salvo slapped about $200 billion worth of tariffs on 5,745 items imported from China.

The U.S. bicycle industry — which is primarily a bicycle sales industry, as less than 10 percent of bikes sold in the U.S. are made here — had fought the tariffs this summer, when they were still just a threat. About 10 percent of the 6,100 comments submitted to the U.S. Trade Representative centered on bikes, Bloomberg reported.

But in the end, the bicycle industry succeeded in getting proposed tariffs dropped on just two items, both critical safety accessories: helmets and lights. Tariffs were levied on 33 types of bikes or bike components and 47 other items used for bicycles as well as other goods.

The move followed a 25 percent tariff the Trump Administration slapped on Chinese-made electric bikes in August.

Whether there will be a wave of bike factories built in the United States remains to be seen.

“I know some companies are already looking at other areas to have things manufactured,” Himmelwright said.

But those would likely be in other low-wage countries, rather than the United States.

As a small independent shop, Freemans Bridge Sports operates in a different market segment than the Walmart up the road, emphasizing quality of product over quantity of sales.

Bikes at Walmart are in the high two-digit or low three-digit price range; bikes at Freemans Bridge carry a pricetag in the mid three-digit to low four-digit price range.

As such, the new tariffs will have a bigger dollar impact at Himmelwright’s shop.

He’s optimistic customers interested in a good bike will stick with him. It’s the ones interested in a really good bike who might take pause.

“People have budgets in mind,” Himmelwright said. “Certainly it could affect people buying a next-level-up bike because of that factor. It’s hard to say.”

Spread over a decade or more of ownership, the tariff doesn’t look as big, he added.

The U.S. bike industry has taken a variety of responses to the tariffs.

Wisconsin-based Trek, a leading brand for mid-market and higher-end bikes, is featuring a “Beat the Tariff Bike Sale” on its website. It told the Milwaukee Journal-Sentinel that the new tariffs would cost it $30 million a year. 

Tire and saddle maker WTB told industry publication Bicycle Retailer and Industry News that it had expedited its fourth-quarter shipping from China, would move what production it could to Taiwan, and is looking at doing some final assembly in California starting next year.

The publication said bike maker KHS launched a “Trump Tariff Buster” promotion, offering to split the tariff increase on China-made bikes that retailers pre-order. 

Some companies that have U.S. production lines supported the new tariffs, including car-rack maker Saris. President Chris Fortune said: “These increased tariffs will help level the playing field for American manufacturers like Saris. We are not asking for special treatment, but rather for an equal playing field in a nondiscriminatory business environment.”

Before the tariffs were imposed, while lobbying still was underway, Huffy Corporation — the leading U.S. importer of bikes — predicted they’d be disastrous. 

CEO Bill Smith said mass-market bikes like the ones his company sells would jump from an average retail cost of $100 to $125 under the full threatened tariff. Bikes sold at independent shops would jump from $500 on average to $625, he added.  

“These are extraordinary price increases for middle class Americans who make up the clear majority of our riders. This proposed tariff will have a devastating impact on bicycle sales as consumer demand will plummet.”

Smith later tempered his message, though:

“We must keep our perspective. Bicycling is an American pastime; it is a part of our cultural DNA … Huffy, and the entire industry, will develop and implement solutions quickly that will entail a variety of options involving sourcing, pricing and logistics. Our industry has faced titanic shifts since the bicycle was invented in 1817. We have overcome all of them, and we will overcome this most recent challenge.”

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