Bikes in the Age of Tariffs
 

An interesting discussion of the impact of US traffic on bicycle manufacturing by Jan Heine. Also interesting to see where components are predominately made currently.

Read more at https://www.renehersecycles.com/bike...ge-of-tariffs/

Considering that he's not an economist, Heine did a decent job in that essay. It's not perfectly accurate in some respects, but it is more nuanced than most media descriptions (most of which are much shorter, by necessity), and certainly more nuanced than the spoutings of most politicians.

It's an interesting topic for cyclists, but I suspect this thread will get locked down or moved to the purgatory that is the P&R subforum.

from Bunch Bikes (cargo)
 

"The result is that our costs per bike are over $1,100 higher than they were one year ago."

"Why not just build it in the US?

In fact - we already do!

We build our bikes at our warehouse and HQ in Denton, Texas with our team of experienced Bunch mechanics, most of whom have been with us for years.

However, we do import many components from manufacturers located overseas. This is where the manufacturing capacity and expertise for top-quality ebike components currently exists.

For example, we're proud to use Tektro Auriga E-Twin+ brakes on our bikes. Tektro is a top-quality brand and these are the best, beefiest brakes that exist on the market for trike use. Tektro brake components are manufactured in China and Taiwan.

To the best of our knowledge, there is no company manufacturing a comparable product in the US. Even American companies like Hayes manufacture components in China or Taiwan and would be subject to the same tariffs.

If we want to put brakes on our bikes - import is our only option!"


https://bunchbike.com/blogs/the-bunc...riff-questions

Aventon
 

https://cimg6.ibsrv.net/gimg/bikefor...444a671326.png

My road frame and its hubs, stem, cages, and seat post were made in the US.

Sure, but those items came from small boutique manufacturers. The US simply does not have the capacity to supply a significant share of the cycling market, and it won't develop it in the next four years. Ditto for plenty of other manufacturing sectors.

Correct, except back in 2007, during Cycle Oregon, I basked in the aura of Chris King (forgot to mention that my headset is also a CK). He looked like he needed to get himself to a boutique. :innocent:

What are you saying? From "boutique" image search:

https://visitnebraska.com/sites/defa...rsboutique.png

https://cimg1.ibsrv.net/gimg/bikefor...437eaf102b.png
Some reading for you.

Being an Economist is over rated. You just need to be a Fox News show host.

Yeah, good luck USA. So far all your president managed to accomplish is tanking the US and world stock market. Next up, US inflation caused by import taxes on everything not made in USA. - 99% of everything. EVERY bike sold in the US will go up too. Some more than others, but there is no such thing as a 100% US bike.

I would like to see a discussion of what I always believed was the impetus for production to go to Asia. The cost of labor.

Pretty much never has been such a thing since, what, 1960's?

Sure, it would be great to move a lot of manufacturing back to the US, but we need to stop and consider what caused those industries to move to other nations. The companies moved in order to reduce manufacturing costs so that there would be a corresponding increase in profits. How are manufacturing costs reduced overseas? The two major reasons are lower wages and less safety & environmental regulation. The need for ever-rising profits is not going to go away, thus, to incentivize the move the US needs to offer similar lower wages and less oversight. Workers in China for example can get by on their salaries because much of their living costs are subsidized and controlled by the state. A worker in the US does not have that same advantage and thus, getting paid $10-15/hr is not a livable proposition. Similarly, how many communities are going to accept unhindered water pollution and air pollution? We love our cheap crap we get at big box stores and don't ever stop to think about how those goods get made so cheap, and frankly, the overwhelming characteristic of Americans is self interest so we only care about what affects us. When the real costs of making America a manufacturing power-house again finally sink into some brains, I believe that many won't be so eager to have those plants move here. Let's face it, the world is a much different place than it was post-WW II and the US's glory days ain't coming back.

For more tariff news, plus an update on de minimus, see:

https://www.bicycleretailer.com/

Actually, I believe there is, or if not 100%, 99%. Last time I pointed this out on BF I was greeted with profanity, so we'll just leave it at that. :)

There is a ton going on with all of this, and I can't claim to understand most of it.

However, I do know much of what you are talking about. Being in heavy industrial/chemical engineering - we design, and build said factories.

The common theme for Americans is NIMBY. We want the products, and we want them cheap - we CLAIM to care about the environment. Yes - CLAIM. But in reality, we only care about the environment directly within our borders. In turn - it's cost prohibitive to build and operate within our borders - so we build these places overseas where safety and environmental concerns are thrown out the window. And we don't care, because cheap plastic crap from Amazon...

Another thing I do know - and this timeframe would obviously be shorter for small scall manufacturing like the bike industry - but for large scale projects, full blown "plants"
-it takes about a year for a client to get a potential project on my desk. Permitting, location selection, basic data and business plan...
-Once on my desk it takes another year +/- to get thru preliminary engineering and estimating
-It then takes upwards of 2 years for production design
-Typically, 3+/- years before ground is broken, and 4-5+/- years for mechanical completion and operations to begin.

Moving bike production, sporting goods, basic consumer goods - that can be done rather quickly. But - costs will go way up.

4-5+ years for major plants/factories to be built - well, by that time the entire landscape can change, and the investments could be near worthless.

A nuke - 8-10+ years.

So, what are we seeing in the Engineering/A&E space right now? Nothing. Bupkis. Layoffs. Our clients, that span multiple sectors and industries - from "Green" to "Dirty Fossil Fuel" and nasty chemicals - not spending a dime.

Perfect. Thank you.

Can you give some examples? I'm curious.

One thing to remember: the goal of any stockholder owned company is profit. That's it.

I am glad I already own 5 bikes and thus can refrain from buying more for a while.
Yesterday I stopped procrastinating and ordered a replacement refrigerator before the tariffs (further) affect prices.

Absent from most of these discussions is the question of whether it is even desirable to move many of these manufacturing jobs back to the US. While there are market inefficiencies and distortions (including some tariffs) in the international trade system, manufacturing and trade largely follows comparative advantage -- a concept we've understood for over 200 years. To put it as simply as possible, the US is a rich country, in part, because we let other countries produce many of the goods (and increasingly services) that require less-skilled workers and less-sophisticated capital equipment, so that we can fully take advantage of our relatively highly-skilled workers and more sophisticated capital by producing more highly-valued items -- and hence to produce more income. In other words, our international trade system makes the US (and our trading partners) ALL better off, even if we do run trade deficits with some of our partners; the corollary is that bringing many of those manufacturing jobs to the US will make us all worse off. (Not that the current policies will bring those jobs back - they won't. But they will cause prices to rise and incomes to fall and thus make us all worse off.)

So, the bike content here is that moving bicycle production back to the US will make them more expensive, which means fewer of us will be able to buy new ones, which means we're worse off. Simple.

Another relevant factor, for anyone who's interested, is the Twin Deficits theory...It's a little more challenging on a technical level, but it suggests that we'll never be able to reduce our overall trade deficit as long as our federal government is running large deficits; and since our current administration is proposing tax policies that will definitively (and substantially) increase the federal deficit and debt, they are actually PROMOTING a larger trade deficits -- even while railing against it.

They are not Called the 'Fairer Sex' for no reason... :love:

Love On
Yuri

somebody appears to actually understand the situation. it's unfortunate that nobody in charge either does or cares.

(IMO) the tariffs are TEMPORARY. Some day soon, everyone will realize if they reduce their tariff to ZERO, the US will too. Then, everyone's economy will shoot for the moon.