Tariffs on China

[MikeD]

I don't think the trade war has affected the price of bikes and bike parts from China (yet), but will companies shift production from China to other countries like Taiwan or even back to the US? Food for thought.

[bicycletricycle]

I don't think the trade war has affected the price of bikes and bike parts from China (yet), but will companies shift production from China to other countries like Taiwan or even back to the US? Food for thought.

Enough of a cost increase for long enough time and production will start to move.

[gasman]

Thoughtful, non-political replies please. I personally think it’s too early to tell what will happen.

[bicycletricycle]

Also, the effect might be small but bicycle parts already not made in China will get slightly cheaper by comparison.

[fiamme red]

I don't think the trade war has affected the price of bikes and bike parts from China (yet), but will companies shift production from China to other countries like Taiwan or even back to the US?In my opinion, it's more likely that production would move to countries like Indonesia and Malaysia.

[bigbill]

I think they'd have to be much larger to make manufacturers relocate or shift production. Not to mention all the supporting industries that have developed around the manufacturing plants.

[bicycletricycle]

I think they'd have to be much larger to make manufacturers relocate or shift production. Not to mention all the supporting industries that have developed around the manufacturing plants.

I agree, somebody like shimano might have excess capacity some place else and they could shift some production to in the short term. I don’t think new factories are going to pop up because of this.

I wonder what the increase in cost for a typical 400 dollar bike will be.

[Ralph]

How much would a 25% tariff increase the cost of a bike and parts. That bike that sits in a bike shop for $4000 might have a cost to the bike manufacturer (assembler) of only a couple hundred. So even with a tariff.....increase not very much.

[CiclistiCliff]

Recent email from a major bike manufacturer stated the price of bikes will increase a noticeable amount if the tariffs go through.

Yay.

[bicycletricycle]

How much would a 25% tariff increase the cost of a bike and parts. That bike that sits in a bike shop for $4000 might have a cost to the bike manufacturer (assembler) of only a couple hundred. So even with a tariff.....increase not very much.

I don’t think 4000 dollar bicycles cost the assembler “a couple hundred” , however, I wonder what cost that tariff is applied to, retail, wholesale, something else?

[oldpotatoe]

How much would a 25% tariff increase the cost of a bike and parts. That bike that sits in a bike shop for $4000 might have a cost to the bike manufacturer (assembler) of only a couple hundred. So even with a tariff.....increase not very much.

Margins on bicycles are small..expect any increase in costs to be added to the 'sticker'(essentially a tax)..not much margin to play with. $4000->$5000..$400->$500, etc.

[fignon's barber]

Recent email from a major bike manufacturer stated the price of bikes will increase a noticeable amount if the tariffs go through.

Yay.


Which bike manufacturer? Because that seems like an excuse to raise prices. I'll say this: IF it occurred, a tariff war with China SHOULD not noticeably raise the price of a performance level bike (the ones folks on this forum identify with).

[fignon's barber]

Margins on bicycles are small..expect any increase in costs to be added to the 'sticker'(essentially a tax)..not much margin to play with. $4000->$5000..$400->$500, etc.


You're right, a retailer couldn't eat the tariff charge( you'd know that better than me of course). But the economics of the manufacturer are different. They could, and even if they passed it on, it would not be noticeable. In 2011, I went overseas to gather data for a possible venture. At that time, carbon framesets were going to the mid size bike makers for approx $200 for standard framesets, the "highest level carbon layups" for roughly $210. I would assume the big brands would be even less. On a high priced bike, a tariff charge would be relatively small.

[joosttx]

Sounds like a great time to invest in wiggle. ;)

[false_Aest]

We have a plan.

The problem is how we make it work for everyone -- esp. since we've embraced omnichannel.

I think adding "tariff surcharge" to online check-out is a really good idea. It can be reversed and directs the customer's attention to the problem at hand. The problem is how that affects dealers. Some like it (especially those who feel like they need to point the finger at the current administration), others, as you would expect, don't like it -- but don't like any price increases/hits to margin/potential discouragement to customers/kittens/puppies/koalas/hugs.

A few companies aren't doing anything and waiting it out. They'll swallow the price increase for 6-10 months and then reassess. The problem I see with this is that it's hard to do a mid-season price increase regardless of how you spin it. And, for the stores that are still pre-booking, I'd be worried about how this affects my cash flow at the beginning of the season.


I havent had my coffee. I'm not sure if this all makes sense.

[bicycletricycle]

All taxes and tariffs are eventually paid for by the consumer.

[Rada]

You're right, a retailer couldn't eat the tariff charge( you'd know that better than me of course). But the economics of the manufacturer are different. They could, and even if they passed it on, it would not be noticeable. In 2011, I went overseas to gather data for a possible venture. At that time, carbon framesets were going to the mid size bike makers for approx $200 for standard framesets, the "highest level carbon layups" for roughly $210. I would assume the big brands would be even less. On a high priced bike, a tariff charge would be relatively small.

Customs value is not based solely on what it cost to produce something.

[fignon's barber]

Customs value is not based solely on what it cost to produce something.

It's got nothing to do with production costs. A tariff is charged to the exporter, in this case the Chinese frame manufacturer.

[MikeD]

I suspect big bike companies to shift their production destined for the US to other countries, and ship Chinese manufacturered bikes to Europe, for example. It's not like China manufacturers all the bikes in the world. Giant, a Taiwanese company and an OEM supplier, has factories in Taiwan, China, and elsewhere. Shimano, I don't think, makes anything in China. Bike companies that don't have this flexibility are going to have problems price wise and longer term. Unfortunately, I don't see China giving in any time soon and the trade war will escalate.

[BdaGhisallo]

It's got nothing to do with production costs. A tariff is charged to the exporter, in this case the Chinese frame manufacturer.

No, tariffs would be charged to the importer. They are taxes on imports that cross into the country. An importer would pay the tariff on the value that they paid for the goods from the exporter and it would be payable to the IRS or whomever the Treasury Dept uses as the collection agency for import taxes.

The US government has no way to levy a tax on a Chinese company that has no legal presence in the US.

[buddybikes]

It would hit the lower end bikes for mass market where everything is domestically sourced.

Not fluent enough in harmonized codes but bike components would be different from a bike.

[fignon's barber]

No, tariffs would be charged to the importer. They are taxes on imports that cross into the country. An importer would pay the tariff on the value that they paid for the goods from the exporter and it would be payable to the IRS or whomever the Treasury Dept uses as the collection agency for import taxes.

The US government has no way to levy a tax on a Chinese company that has no legal presence in the US.


Should have typed "exported product from Chinese bike manufacturer".

[FlashUNC]

White Industries already announced a new surcharge on their orders given the tariffs on raw materials.

http://www.whiteind.com/teriff

[Rada]

It's got nothing to do with production costs. A tariff is charged to the exporter, in this case the Chinese frame manufacturer.

Computed Method Of Valuation

The computed value takes into account the cost of materials, fabrication and processing of the goods by the exporter. It also includes the transport, loading/unloading, insurance as well as handling charges payable by the importer.

https://tacustoms.com/importers-valuation-guide-guide-how-to-determine-customs-value-for-duty/

Not sure where you got your info, but it is not correct. I admit it has been a while since I was in the business, but I was a licensed Customs Broker for thirteen years. Things may have changed in that time, however, the basics are much the same.

[unterhausen]

if you read that link, it seems most likely that an importer would just pay tariffs on the actual price of the goods. If the importer is more like Apple, where they are making the items in their own plants, they would have to calculate their costs. I saw a company that said they were raising their prices 25 percent to pay for tariffs because they were paying 25 percent tariffs. I am pretty sure they aren't doing it right.

[ftf]

The reality is tariffs will change nothing except the price of goods for the consumer. Manufacturing isn't coming back to the US, unless Americans are willing to take HUGE pay cuts, and work in less than OSHA level environments, that isn't happening....

Even the world bank thinks tariffs don't work, that should tell you something.

[rnhood]

We are not going to have a trade war. We are just seeing Trump use an unorthodox, yet somewhat effective, negotiating strategy on trade. It's a style similar to that which some large corporations employ when they want various departments to ensure they are at their lowest sustainable budget. In other words, no fat.

I doubt seriously that we are going to have a trade war because once countries like China have done all they can, then we will back off and call it a deal.

As far as prices increasing on Chinese goods, well that isn't real clear. The Yaun has taken a beating since the onset of the tariff threat, which makes Chinese good even cheaper thus countering some of the tariff cost. The net will likely be little to go change.

China has the most to lose from a trade war, so they will be the ones eager to close on a deal.

[Rada]

if you read that link, it seems most likely that an importer would just pay tariffs on the actual price of the goods. If the importer is more like Apple, where they are making the items in their own plants, they would have to calculate their costs. I saw a company that said they were raising their prices 25 percent to pay for tariffs because they were paying 25 percent tariffs. I am pretty sure they aren't doing it right.

When did Apple acquire means of production?

[ftf]

We are not going to have a trade war. We are just seeing Trump use an unorthodox, yet somewhat effective, negotiating strategy on trade. It's a style similar to that which some large corporations employ when they want various departments to ensure they are at their lowest sustainable budget. In other words, no fat.

I doubt seriously that we are going to have a trade war because once countries like China have done all they can, then we will back off and call it a deal.

As far as prices increasing on Chinese goods, well that isn't real clear. The Yaun has taken a beating since the onset of the tariff threat, which makes Chinese good even cheaper thus countering some of the tariff cost. The net will likely be little to go change.

China has the most to lose from a trade war, so they will be the ones eager to close on a deal.


1. China does not have much to loose in a trade war with merely the US, they have plenty of other nations lined up at the trough. On the other hand the US has much to lose as we get most of our goods from the China, and they stopped taking our Plastic for recycle, as the US does not recycle it's own plastic, it was done in China, that alone is a pretty major blow.

2. The Yuan has been artificially regulated by the Chinese government for a very long time now, it would be interesting if it was not, but it is, sooooo your point about it being "hammered" is all smoke and mirrors. And actually not true, it went from .16 to .15 in the last 5 years.

3. This will not work out well for the US, though it is interesting to see people that used to scream and cry about "markets" now support the meddling in those sacred markets and even further socialism, in the form of bailouts for farmers and the like. Also what are we going to do with all this plastic now.

4. This isn't an unorthodox plan, it's been tried by people in the past, and in fact has been proven to be dangerous and well a bad idea.

[ultraman6970]

Is still to early to know if the tariff games are working or not.

As long as the italians arent affected all ok for me :p

[Scuzzer]

1. China does not have much to loose in a trade war with merely the US, they have plenty of other nations lined up at the trough. On the other hand the US has much to lose as we get most of our goods from the China, and they stopped taking our Plastic for recycle, as the US does not recycle it's own plastic, it was done in China, that alone is a pretty major blow.

...Also what are we going to do with all this plastic now.

What do tariffs have to do with plastic recycling? They aren't taking anyone's plastic refuse anymore. As for what are we going to do with the plastic, we'll bury in our landfills instead of shipping it halfway around the world so they could bury it in theirs. Hopefully less will end up in the ocean this way.

[ftf]

What do tariffs have to do with plastic recycling? They aren't taking anyone's plastic refuse anymore. As for what are we going to do with the plastic, we'll bury in our landfills instead of shipping it halfway around the world so they could bury it in theirs. Hopefully less will end up in the ocean this way.


Sure I'm sure it's better to fill our landfills up with plastic, than ship it to china where it will be made in to new goods.

[BdaGhisallo]

The US has long been winning this ‘war’ with China. They send over piles and piles of goods and in return get US dollars which only have value as long as the US govt chooses to redeem them for something of value. They get a currency over which the US has control and can inflate away the value of.

[CunegoFan]

Even the world bank thinks tariffs don't work, that should tell you something.

If they don't work then why does China use them to prevent itself from U.S. goods?

It appears when China puts up trade barriers against the U.S. everyone looks the other way. The minute the U.S. begins to reciprocate people start buggin'. What is the alternative plan to get China to remove its trade barriers?

[oldpotatoe]

If they don't work then why does China use them to prevent itself from U.S. goods?

It appears when China puts up trade barriers against the U.S. everyone looks the other way. The minute the U.S. begins to reciprocate people start buggin'. What is the alternative plan to get China to remove its trade barriers?

Sane, polite negotiation?

[wallymann]

tariff wars never work.

I personally think it’s too early to tell what will happen.

i see no evidence of a strategy of any sort.

We are just seeing Trump use an unorthodox, yet somewhat effective, negotiating strategy on trade.

#artofthedeal #winning #bigly ;-)

Sane, polite negotiation?

[bicycletricycle]

Sane, polite negotiation?

Good luck negotiating with good intentions, history seems to show that both the carrot and stick are required. To be clear, I have no idea if the tariffs that we are imposing are the proper stick in this situation.

[makoti]

Sure I'm sure it's better to fill our landfills up with plastic, than ship it to china where it will be made in to new goods.

No, it won't.

[MikeD]

We (the US) need to do business with other countries than China. China is not our friend.

[verticaldoug]

The US has long been winning this ‘war’ with China. They send over piles and piles of goods and in return get US dollars which only have value as long as the US govt chooses to redeem them for something of value. They get a currency over which the US has control and can inflate away the value of.

and we were able to export our pollution by moving manufacturing to china.

The funny thing about taxes, you get less of the thing. We already have low unemployment in the US, 3.9%. I expect tariffs to introduce more inflation by raising prices. I expect the US companies which benefit from the price increases to keep most for shareholders, and pass only a small amount on to their workers. For the rest of the population, you will see continued low wages gains vs higher inflation so declining or negative REAL wage gains. This has more to do with corporate behavior and regulatory changes.

The net result will be most Americans end up poorer because of the tariffs while a few benefit greatly. That's just economics.

[Black Dog]

and we were able to export our pollution by moving manufacturing to china.

The funny thing about taxes, you get less of the thing. We already have low unemployment in the US, 3.9%. I expect tariffs to introduce more inflation by raising prices. I expect the US companies which benefit from the price increases to keep most for shareholders, and pass only a small amount on to their workers. For the rest of the population, you will see continued low wages gains vs higher inflation so declining or negative REAL wage gains. This has more to do with corporate behavior and regulatory changes.

The net result will be most Americans end up poorer because of the tariffs while a few benefit greatly. That's just economics.

Yes, when the system is allowed to work that way. The growing wage and wealth gap is the result of tax policy not some natural force. Those same policies are moving us closer to a feudal system.

[ultraman6970]

Some people see inflation as a bad thing, but inflation is good or bad depending on what is causing it. In the US case inflation is indication that the economy is moving, people is demanding more because there's more money around... the shocking part of the american system "for me" is that inflation is not incorporated in the wages besides the anual raise of income which usually is less than the year's inflation, in other countries you see that your income increases with the economy loss of buying power (inflation), you create more inflation tho, but in those cases the reason of inflation is because they have nothing to buy, you have a lot of money and nothing to buy... which is not the case of the american economy.

Is really early to know who will win the trade war, china is trying to get a free trade with the UK, im not familiar with the UK but being an island I doubt they will need a lot more of what they already have, maybe china will take all their trash for recycling as a pay for plastic soccer balls? Dunno, if they want to freetrade with the UK why not freetrade or find an arrangement with the US then so everybody can enjoy peace??? Looks like the new mexican president wants to work out the situation...

Oh well...

[oldpotatoe]

Good luck negotiating with good intentions, history seems to show that both the carrot and stick are required. To be clear, I have no idea if the tariffs that we are imposing are the proper stick in this situation.

You’ll always get more flies with honey than vinegar. Yup, China is not a friend but economic competitor, but no reason to not approach trade negotiations with grace rather than shouting, bullying.

[bicycletricycle]

You’ll always get more flies with honey than vinegar. Yup, China is not a friend but economic competitor, but no reason to not approach trade negotiations with grace rather than shouting, bullying.

I am not sure any deal can be reached between adversaries without the pressure of negative consequences. Again, I do not know if tariffs are the correct negative consequence in this case but just asking nicely rarely works. Also, rewarding behavior you don't like with honey seems like a risky long term strategy.

[cloudguy]

I am not sure any deal can be reached between adversaries without the pressure of negative consequences. Again, I do not know if tariffs are the correct negative consequence in this case but just asking nicely rarely works. Also, rewarding behavior you don't like with honey seems like a risky long term strategy.

The trouble is that China is still communist in most respects, meaning their leaders are much less susceptible to the will of the people, who are no strangers to suffering and poverty - at least those old enough to remember how things were before the boom. So the effects of any of our tariffs on them will likely be much more "willingly" accepted by the populace, as opposed to here, where the effects of their tariffs on us will likely lead to a massive revolt (at the voting booth) by those most strongly affected economically. There is just know way US voters will suffer the consequences of a full-out trade war. This "plan" is doomed and will be dropped within two years, if not sooner.

[Ralph]

Tariff's don't work. At least not in the long term. How many times in the history of our country do we have to relearn that?

Economists like to use the 1-5 rule. They create one job, but lose 5.

As an example, with tariff's on steel and aluminum imports....we maybe put 25,000 people back to work making steel and aluminum in the US. And every business that uses those materials in their manufacturing process sees increased costs and eventually has to raise their prices. At the margin....they lose some sales. Maybe 125,000 American lose jobs. And 330 million people pay more for everything....that money comes from somewhere else...eating out, travel, discretionary items, whatever. Can already see GDP being affected.

[bicycletricycle]

If there is a "plan" than it may be in fact be doomed for the reasons you lay out. Certainly China has a lot of control over it's population, however, if they can not continue to provide huge expansion in the economy year over year that control will soften.

The trouble is that China is still communist in most respects, meaning their leaders are much less susceptible to the will of the people, who are no strangers to suffering and poverty - at least those old enough to remember how things were before the boom. So the effects of any of our tariffs on them will likely be much more "willingly" accepted by the populace, as opposed to here, where the effects of their tariffs on us will likely lead to a massive revolt (at the voting booth) by those most strongly affected economically. There is just know way US voters will suffer the consequences of a full-out trade war. This "plan" is doomed and will be dropped within two years, if not sooner.

[sg8357]

[snip] The minute the U.S. begins to reciprocate people start buggin'. What is the alternative plan to get China to remove its trade barriers?

China requires technology transfer to build factories in China.
You have to share you tech with your Chinese 'partner'.
In aerospace what you do is share tech 2 generations back, you get
to build stuff in China and sell to the Chinese. Comac, the Chinese Boeing
builds shiny new airplanes with old tech, the planes are late and overweight
and get worse fuel mileage than Western planes. The planes sell poorly
and don't reach economical production quantities.
The above has been going on for at least 20 years.

Ain't trade barriers great.

[bicycletricycle]

The economists do seem to have this one right. Tariffs in the long run are a bad economic strategy. I wonder if history has any examples of them being used successfully in the short term as political leverage.


Tariff's don't work. At least not in the long term. How many times in the history of our country do we have to relearn that?

Economists like to use the 1-5 rule. They create one job, but lose 5.

With tariff's on steel and aluminum imports....we maybe put 25,000 people back to work making steel and aluminum in the US. And every business that uses those materials in their manufacturing process sees increased costs and eventually has to raise their prices. At the margin....they lose some sales. Maybe 125,000 American lose jobs. And 330 million people pay more for everything....that money comes from somewhere else...eating out, travel, whatever. Can already see GDP being affected.

[ptourkin]

If there is a "plan" than it may be in fact be doomed for the reasons you lay out. Certainly China has a lot of control over it's population, however, if they can not continue to provide huge expansion in the economy year over year that control will soften.

So we know that there isn't a plan in the strategic trade sense, but even if there was, it's not being tactically deployed:

https://www.nytimes.com/2018/08/05/us/politics/nucor-us-steel-tariff-exemptions.html

[bicycletricycle]

So we know that there isn't a plan in the strategic trade sense, but even if there was, it's not being tactically deployed:

https://www.nytimes.com/2018/08/05/us/politics/nucor-us-steel-tariff-exemptions.html


I guess that would depend on what you think they are aiming for. The article seems to be claiming that this is entirely cooked up by the steel industry, if so, their plan seems to have been expertly tactically deployed.

All of this crap makes me increasingly libertarian leaning. Smallest government possible please.

[MikeD]

The trouble is that China is still communist in most respects, meaning their leaders are much less susceptible to the will of the people, who are no strangers to suffering and poverty - at least those old enough to remember how things were before the boom. So the effects of any of our tariffs on them will likely be much more "willingly" accepted by the populace, as opposed to here, where the effects of their tariffs on us will likely lead to a massive revolt (at the voting booth) by those most strongly affected economically. There is just know way US voters will suffer the consequences of a full-out trade war. This "plan" is doomed and will be dropped within two years, if not sooner.


On the financial news today, the Chinese stock market is off 30% from its peak. That's a tremendous drop. Using that as an indicator, the trade war is affecting them a lot more than us. Wonder what their president for life thinks about that?

[ptourkin]

I guess that would depend on what you think they are aiming for. The article seems to be claiming that this is entirely cooked up by the steel industry, if so, their plan seems to have been expertly tactically deployed.

All of this crap makes me increasingly libertarian leaning. Smallest government possible please.


Just note when you consider small government that the same "think tanks" that are encouraging you to read von Mises (Cato and anything cited by Reason) are funded by the big corporations that are benefiting from the exclusion process delineated here and none of it was ever intended to trickle down to you. It's quite the scam. If we don't regulate, they get to do whatever they want. There are no real ideological libertarians at these think tanks and in government. The only people who believe any of it are fan boys who will never share a dime..

Don't worry. I'm out. No need to lock this on my account.

[CunegoFan]

Tariff's don't work. At least not in the long term. How many times in the history of our country do we have to relearn that?

Economists like to use the 1-5 rule. They create one job, but lose 5.

As an example, with tariff's on steel and aluminum imports....we maybe put 25,000 people back to work making steel and aluminum in the US. And every business that uses those materials in their manufacturing process sees increased costs and eventually has to raise their prices. At the margin....they lose some sales. Maybe 125,000 American lose jobs. And 330 million people pay more for everything....that money comes from somewhere else...eating out, travel, discretionary items, whatever. Can already see GDP being affected.

Again, where are all economists spinning tales of imminent doom for Chinese economy because of their tariffs and trade barriers? Twenty years not long enough? Do we have to wait forty? Sixty? A hundred? The long term can be a very very long time.

Chinese economists seem to be using the 5-1 rule, just like other developing nations where the standard strategy seems to be: Export to the U.S. while preventing imports from the U.S.

Economists don't appear to be very good at measuring jobs lost by tariffs in the tariffed country. How many jobs would Facebook have added if the Chinese would have allowed it to operate in China instead of keeping it out while a homegrown alternative was created? What about Google? What about Hollywood, which can only release a limited number of films in China?

[false_Aest]

From inside the bike industry:

Most of the MFGs I've worked with have an assembly factory in China and one in Taiwan. How do you get around tariffs and help keep prices down?

MFG frames, wheels, tires, in China. Ship to Taiwan. Assemble in Taiwan. Ship from Taiwan.

Price will still go up but its less than what it would with the tariff.

Same thing already happens for EU anti-dumping tariffs.

[MikeD]

From inside the bike industry:



Most of the MFGs I've worked with have an assembly factory in China and one in Taiwan. How do you get around tariffs and help keep prices down?



MFG frames, wheels, tires, in China. Ship to Taiwan. Assemble in Taiwan. Ship from Taiwan.



Price will still go up but its less than what it would with the tariff.



Same thing already happens for EU anti-dumping tariffs.


Yep, there can be ways around tariffs. I read that Brazil is selling most of its soybean crop to China. They are then buying soybeans for domestic consumption from us. It's cheaper for Brazil to buy soybeans from us than to grow their own. I had to chuckle when I read that.

[bicycletricycle]

Certainly people use ideas that support their own ends and knowing who is or is not a real libertarian may be hard. As far as sharing goes, that is the whole point, no one is forced to share and we just make voluntary trades, no forced sharing, no forced trickle down , no forced nothing.

Anyways, as far as Mises goes, like it or not, I think his basic criticism of centrally controlled economies stands. On the other hand, it is hard to imagine an anarcho capitalist Rothbardian world with markets running wild.

Also, in this particular case libertarians would all be against tariffs (I am no expert and I am sure some are pro tariff somehow), of coarse they would be against regulating monopoly’s and trusts as well.

Also, every special interest group and think tank supports what is in their interest or the interest of their backers, that is the whole point. What else should they be doing? What is even wrong with that?

I am currently working on a project in the medical industry and the burden that regulations cause are extremely plain to see. Worse products, excessive costs, increased risks and increased time to get life improving procedures to the market.



Just note when you consider small government that the same "think tanks" that are encouraging you to read von Mises (Cato and anything cited by Reason) are funded by the big corporations that are benefiting from the exclusion process delineated here and none of it was ever intended to trickle down to you. It's quite the scam. If we don't regulate, they get to do whatever they want. There are no real ideological libertarians at these think tanks and in government. The only people who believe any of it are fan boys who will never share a dime..

Don't worry. I'm out. No need to lock this on my account.

[Rada]

From inside the bike industry:

Most of the MFGs I've worked with have an assembly factory in China and one in Taiwan. How do you get around tariffs and help keep prices down?

MFG frames, wheels, tires, in China. Ship to Taiwan. Assemble in Taiwan. Ship from Taiwan.

Price will still go up but its less than what it would with the tariff.

Same thing already happens for EU anti-dumping tariffs.

It might be happening, but it is in violation of law. Assembly does not change country of origin.

[verticaldoug]

It situations like this, instead of discussing the broad concepts, it is better to look at hard numbers.

There are 83k US workers in Blast Furnace and mills, another 64k in foundries. It takes time to scale, and the factories are effecient, so how many jobs really get create?

Nucor and US Steel have combined revenue of $25b. Let's say revenue jumps 50% yoy which is huge, then that is a 12.5b increase.

However, if you look what is happening soybean farmers and other ag, with price declines, US already announced a US$12b aid package.

When you look at numbers, you see it is not a winning strategy short term, and whether it is a winning strategy longterm, is a very large question.

What you have is everyone losing a little (taxes for aid) while a few win. That sounds a lot like the State picking winners and losers to me. Which understanding how Trump thinks, it is exactly what he wants to do.

[zap]

In one sense (national security) Trump might be correct.

Take WW2 manufacturing of war material in the US. Could the US do the same today............OK, don't hit on Canada.

When I was in manufacturing, the firm I worked for imported special stainless steel sheets from France. Orders had to be placed in advance as timely supply was not guaranteed. The fact that we could not order from a US supplier annoyed my old boss (biz owner) to no end.

[oldpotatoe]

In one sense (national security) Trump might be correct.

Take WW2 manufacturing of war material in the US. Could the US do the same today............OK, don't hit on Canada.

When I was in manufacturing, the firm I worked for imported special stainless steel sheets from France. Orders had to be placed in advance as timely supply was not guaranteed. The fact that we could not order from a US supplier annoyed my old boss (biz owner) to no end.

Or not. The entire steel and aluminum requirement for the military is easily supplied by US manufacturers now. A world war(total war) is another animal.

I'm thinking you couldn't order from a US manufacturer was because of $, not because it didn't exist..but don't really know.

[Mzilliox]

It situations like this, instead of discussing the broad concepts, it is better to look at hard numbers.

There are 83k US workers in Blast Furnace and mills, another 64k in foundries. It takes time to scale, and the factories are effecient, so how many jobs really get create?

Nucor and US Steel have combined revenue of $25b. Let's say revenue jumps 50% yoy which is huge, then that is a 12.5b increase.

However, if you look what is happening soybean farmers and other ag, with price declines, US already announced a US$12b aid package.

When you look at numbers, you see it is not a winning strategy short term, and whether it is a winning strategy longterm, is a very large question.

What you have is everyone losing a little (taxes for aid) while a few win. That sounds a lot like the State picking winners and losers to me. Which understanding how Trump thinks, it is exactly what he wants to do.

My take from what ive read and my study of economics in college tends to agree with this. to me, this is a bully play, a macho play, just posturing to see what happens, but no real end game. we will see.

[wallymann]

the fact that we could not order from a US supplier annoyed my old boss (biz owner) to no end.

short-term corporate profit incentives and consumer demand for cheap products in the US mandate the lowest-cost suppliers, thus reliance on china.

[DRZRM]

Yes, the fact that the wishes of a clear majority of a voting population would be entirely overlooked by a demagogue willing to wholly ignore the wishes of most of the people he allegedly represents, while enriching a small oligarchy throught the manipulation of government policies is chilling. Thank goodness that can't happen here. :p

Sorry mods, I too will voluntarily opt out, no need to lock the thread.



The trouble is that China is still communist in most respects, meaning their leaders are much less susceptible to the will of the people, who are no strangers to suffering and poverty - at least those old enough to remember how things were before the boom. So the effects of any of our tariffs on them will likely be much more "willingly" accepted by the populace, as opposed to here, where the effects of their tariffs on us will likely lead to a massive revolt (at the voting booth) by those most strongly affected economically. There is just know way US voters will suffer the consequences of a full-out trade war. This "plan" is doomed and will be dropped within two years, if not sooner.

[beeatnik]

We are not going to have a trade war. We are just seeing Trump use an unorthodox, yet somewhat effective, negotiating strategy on trade. It's a style similar to that which some large corporations employ when they want various departments to ensure they are at their lowest sustainable budget. In other words, no fat.

I doubt seriously that we are going to have a trade war because once countries like China have done all they can, then we will back off and call it a deal.

As far as prices increasing on Chinese goods, well that isn't real clear. The Yaun has taken a beating since the onset of the tariff threat, which makes Chinese good even cheaper thus countering some of the tariff cost. The net will likely be little to go change.

China has the most to lose from a trade war, so they will be the ones eager to close on a deal.

https://www.cnn.com/2018/08/08/us/sikh-attacks-in-california-trnd/index.html

[merckxman]

From EU news source:
"WASHINGTON, USA – The President Trump triggered trade war with China has led the United States to charge the import of electric bicycles from China with a 25 percent tariff. Next to complete e-bikes also e-bike motors are hit with the same tariff. The imposition of the tariff starts by August 23."

[redir]

Tariff's don't work. At least not in the long term. How many times in the history of our country do we have to relearn that?

Economists like to use the 1-5 rule. They create one job, but lose 5.

As an example, with tariff's on steel and aluminum imports....we maybe put 25,000 people back to work making steel and aluminum in the US. And every business that uses those materials in their manufacturing process sees increased costs and eventually has to raise their prices. At the margin....they lose some sales. Maybe 125,000 American lose jobs. And 330 million people pay more for everything....that money comes from somewhere else...eating out, travel, discretionary items, whatever. Can already see GDP being affected.

Yes but steel workers like coal miners are iconic Americana that helps certain parties maintain power when they use them as props around election time. That's really what it's all about. The reality is we are going backwards.

[dancinkozmo]

heres an interview with 3 industry people that gives their take on the tariffs, how it could effect consumer costs, domestic bike industry etc.

https://www.pinkbike.com/news/bike-industry-weighs-in-on-tariffs-of-chinese-mountain-bike-imports-2018.html

US BICYCLE IMPORTS VS EXPORTS:



https://ep1.pinkbike.org/p5pb16199268/p5pb16199268.jpg

[Avispa]

heres an interview with 3 industry people that gives their take on the tariffs, how it could effect consumer costs, domestic bike industry etc.
https://ep1.pinkbike.org/p5pb16199268/p5pb16199268.jpg
Wow, cool map! I am assuming California is the main importer state because of Apple, Google and the other tech companies making goods in China?

It is really too bad that tariffs are mainly a numbers/economic thing (not to say political as well), and they do not impose tariffs on human rights violations and other important issues affecting the world today.

What is going on in China, as you may all know, is that they have taken advantage of their massive population to employ people in factories... This has created the prefect setting for modern day "controlled" slavery: their own people within their own borders, so very little can be done from the outside.

[CunegoFan]

From EU news source:
"WASHINGTON, USA – The President Trump triggered trade war with China has led the United States to charge the import of electric bicycles from China with a 25 percent tariff. Next to complete e-bikes also e-bike motors are hit with the same tariff. The imposition of the tariff starts by August 23."

If this includes eMTBs then I am all for it. Thanks, Trump. You done good.

[cloudguy]

What is going on in China, as you may all know, is that they have taken advantage of their massive population to employ people in factories... This has created the prefect setting for modern day "controlled" slavery: their own people within their own borders, so very little can be done from the outside.

Yes, the fact that over a billion people are no longer dirt poor and starving is a sad state of affairs. Its called capitalism - not American style, of course, but capitalism none the less. I wonder if all those "enslaved" Chinese workers would prefer to go back to the good old days of starving to death.

[cdimattio]

Tariff's don't work. At least not in the long term. How many times in the history of our country do we have to relearn that?

Economists like to use the 1-5 rule. They create one job, but lose 5.

As an example, with tariff's on steel and aluminum imports....we maybe put 25,000 people back to work making steel and aluminum in the US. And every business that uses those materials in their manufacturing process sees increased costs and eventually has to raise their prices. At the margin....they lose some sales. Maybe 125,000 American lose jobs. And 330 million people pay more for everything....that money comes from somewhere else...eating out, travel, discretionary items, whatever. Can already see GDP being affected.


Free trade is a bit of an academic myth. When and where did it exist in history? Throughout history there are countless real examples of protectionism creating real wealth and prosperity. Great Britain and the USA as historical examples became rich on the basis of protectionism and subsidies.

And the simplistic reaction to tariffs is shallow and lacks understanding. Tariffs are just a single economic lever when currency manipulation and theft of intellectual property have become state sanctioned economic strategies.

China’s economic success lays bare an uncomfortable historical truth: No one who preaches ‘free trade’ really practices it.

[dancinkozmo]

Wow, cool map! I am assuming California is the main importer state because of Apple, Google and the other tech companies making goods in China?



sorry i shouldve titled it...these graphs are for bicycles. most made in china bikes are expprted to california. most made in usa bike exports (primarily treks wisconsin mfg facility) are sent to canada

US bicycle exports have flat-lined for ten years. With no commercial incentives offered from the Feds and no industry to protect at home, tariffs on bicycles amount to a stiff federal tax on end consumers and a sales tax hand-out to the States.

[verticaldoug]

Free trade is a bit of an academic myth. When and where did it exist in history? Throughout history there are countless real examples of protectionism creating real wealth and prosperity. Great Britain and the USA as historical examples became rich on the basis of protectionism and subsidies.

And the simplistic reaction to tariffs is shallow and lacks understanding. Tariffs are just a single economic lever when currency manipulation and theft of intellectual property have become state sanctioned economic strategies.

China’s economic success lays bare an uncomfortable historical truth: No one who preaches ‘free trade’ really practices it.

But did the tariff originate to 'close the gap' with the wealthier nation or vice versa? The United States has used tariffs to its advantage. However, for much of its history, the US population was rapidly growing, and we were the poorer nation when compared to Europe. You can look at the trade in cloth with Britain post the War of 1812.

You are correct in the truth is the creation of wealth for a nation has multiple factors running simultaneously and to say tariffs were key may be missing the forest for the trees. I tend to think tariffs foster foreign direct investment by the wealthy foreignors who still seek to 'sell to' the other economy. The real question for trump's tariffs is whether or not foreign capital will flow to the united states to move manufacturing over here.

[bicycletricycle]

Yes, the fact that over a billion people are no longer dirt poor and starving is a sad state of affairs. Its called capitalism - not American style, of course, but capitalism none the less. I wonder if all those "enslaved" Chinese workers would prefer to go back to the good old days of starving to death.

Well said my friend. China has problems but like it or not, free market zones within the country are pulling its people out of poverty at an amazing rate.

[ultraman6970]

A lot of other nations use tariffs/taxes to protect their own industry but all I read here is that is bad to protect your own industry... with nafta you only see the main countries tied to it but there's other small countries associated with nafta, from which i have not heard too much because those countries try to negotiate their deals with the US in a regular basis. So why other countries can't do that? No clue...

Not that I love the "commander" but if you look at it, the US got some deals that were really dumb for a while now and at some point that had to change a little bit IMO, was a mere thing of time. Actually now from what ive read while outside of the country looks like the mexican president wants to revise his deals with the US... when will happen? who knows, so the thing to me is this, if other countries can see that for one reason or another the deals needs to be revised to make the things little bit more fair??, why they dont want to even want to consider it? Dont want to close the thread and please dont take my comment in a bad way but if we think it little bit deeper it has to do more than nothing with the head of the snake than anything else, and that somehow to me is the main reason why nobody wants to negotiate their deals, I bet if somebody is willing to bulge 1 or 2 % this thing would had been over already... 1 or 2% of more money coming from exports doubt will be a bad thing, because in the chain the money poor from the top to the bottom one way or another...

A good example of a country that protects itself is brazil, every economic measure in brazil is made to protect the internals production (independently if it works or not ok?), if that affects other countries they dont give a darn about it. Years ago ATT tried to buy equipment racks from a brazilian company for x dollars, way bellow their price. The owner of the company closed that friday and went to talk with the economy and communications ministers that ATT wanted for F.. them! so since he was not able to operate at those prices he was closing the 1200 employees factory... that friday night the ATT guy in charge got a baseball bat up his you know what... and brazil started the process of kicking ATT out of brazil... by monday ATT was paying full price plus a premium for the equipment needed, the inconveniences created and to sweep that under the rug. My dad was with NEC back then, and had friends in ATT brazil, that's how I knew about it... that screw up was super scary for ATT. Either way you can see the difference in mentality in brazil.

[tuscanyswe]

I bet negotiators and leaders of nations love to make deals when they are bullied. Dont we all.
And fair, what is fair and how is that determined? Trump does not seem to have a clue on whats fair in most regards from what ive seen thus far.

[tylercheung]

A couple of thoughts:

Conditions in China - it's actually gotten to the point that the quality of life and wages in China have risen, such a lot of their manufacturing jobs are outsourced to Vietnam, and other "emerging markets". Or at least the new manufacturing hubs have moved to more impoverished provinces. Former Chinese manufacturing hubs - Shenzen, Shanghai, etc have emerged to the "next stage" of capitalism - design, finance, capital. Still hampered w/ lack of regulations, safety, etc such that the average Chinese worker enjoys much less safety, etc than an American one, but considering that 40-50 years ago, much of the population were enduring famine, the progress has been remarkable.

US manufacturing jobs - if they were really serious about jobs, in addition to the tariffs, they would have to spend, or get US companies to spend, to invest in infrastructure, manufacturing hubs. The reason why electronics and likely carbon fiber bike makers, is that the Chinese have spent huge amounts of capital to make places like Shenzhen (and maybe taiwan to a lesser extent spending on their own places like Hsinchu), into a network of, not just the plants/labor themselves, but suppliers, prototypers, and other vital components. Educational systems for a labor force that actually knows how to operate machines at the plant. Things like that.

I'm not sure how Allied does it in Alabama, but If you start a bike plant here, you have to build all that from scratch.

It had gotten such that if you were an electronics startup that needed to rapidly prototype components, you could get someone in Shenzhen to do it in under a day, versus weeks in the US.

Here, there are elements of this, but it seems like it has all been private capital w/ a bit of nudging via local tax incentives and stuff. BMW and their supplier network in NC, Toyota's and their network in Kentucky, Foxconn attempting to do something in the US as well.

But if the US wants those jobs back (and if it is still a good idea), they would have to spend the billions that China spent on Shenzhen, basically transforming a fishing village into a city the size of Los Angeles, in under a decade...

World War 3 - "national security concerns" aside - the whole point of the international trade system (that they are in the midst of destroying with tariffs and other measures) is to avoid WW3 - that countries would be so interdependent on these networks of systems that an extreme WW3 type scenario would be extremely unlikely. Yes, there were hiccups and missteps, that cost American lives, but one would argue that the globalization system that was built, was the ultimate ace in the hole for the US. Spending US dollars for a trade platform and system that we control, that ensured 70+ years of relative peace, or at least kept the Cold War cold, and kept potential world-threatening conflagrations into localized conflicts.

Destroying this, and going back to a system of nationalism, where world-wide hot wars would become more likely, seems antithetical to "national security".

[Big Dan]

A lot of other nations use tariffs/taxes to protect their own industry but all I read here is that is bad to protect your own industry... with nafta you only see the main countries tied to it but there's other small countries associated with nafta, from which i have not heard too much because those countries try to negotiate their deals with the US in a regular basis. So why other countries can't do that? No clue...

Not that I love the "commander" but if you look at it, the US got some deals that were really dumb for a while now and at some point that had to change a little bit IMO, was a mere thing of time. Actually now from what ive read while outside of the country looks like the mexican president wants to revise his deals with the US... when will happen? who knows, so the thing to me is this, if other countries can see that for one reason or another the deals needs to be revised to make the things little bit more fair??, why they dont want to even want to consider it? Dont want to close the thread and please dont take my comment in a bad way but if we think it little bit deeper it has to do more than nothing with the head of the snake than anything else, and that somehow to me is the main reason why nobody wants to negotiate their deals, I bet if somebody is willing to bulge 1 or 2 % this thing would had been over already... 1 or 2% of more money coming from exports doubt will be a bad thing, because in the chain the money poor from the top to the bottom one way or another...

A good example of a country that protects itself is brazil, every economic measure in brazil is made to protect the internals production (independently if it works or not ok?), if that affects other countries they dont give a darn about it. Years ago ATT tried to buy equipment racks from a brazilian company for x dollars, way bellow their price. The owner of the company closed that friday and went to talk with the economy and communications ministers that ATT wanted for F.. them! so since he was not able to operate at those prices he was closing the 1200 employees factory... that friday night the ATT guy in charge got a baseball bat up his you know what... and brazil started the process of kicking ATT out of brazil... by monday ATT was paying full price plus a premium for the equipment needed, the inconveniences created and to sweep that under the rug. My dad was with NEC back then, and had friends in ATT brazil, that's how I knew about it... that screw up was super scary for ATT. Either way you can see the difference in mentality in brazil.

Are you ready to pay more for your everyday items?
Part of the problem is that we like and are used to buying cheap stuff.
How much would you pay for an US made inner tube for example?

[ColonelJLloyd]

How much would you pay for an US made inner tube for example?

No me importa (https://youtu.be/_wACCgCCjRc). Tubeless! 'Murica!










*Your point is valid and I agree FWIW.

[cloudguy]

Destroying this, and going back to a system of nationalism, where world-wide hot wars would become more likely, seems antithetical to "national security".

Excellent point.

[ultraman6970]

Well, I do not use tubes... and all I have is not made in the US anyways (as many people here) so if stuff goes up as forecast say, well, will take me longer to buy the stuff but probably will be the almost the same, thats the thing, we wont know yet.

[redir]

The trouble is that China is still communist in most respects, meaning their leaders are much less susceptible to the will of the people, who are no strangers to suffering and poverty - at least those old enough to remember how things were before the boom. So the effects of any of our tariffs on them will likely be much more "willingly" accepted by the populace, as opposed to here, where the effects of their tariffs on us will likely lead to a massive revolt (at the voting booth) by those most strongly affected economically. There is just know way US voters will suffer the consequences of a full-out trade war. This "plan" is doomed and will be dropped within two years, if not sooner.

IDK a lot of those guys who are loosing their jobs at Harley Davidson are still on the Trump Train. Ya can't fix stupid I guess. OF course if you are a soy bean farmer then you basically got paid off for your next vote.

[ptourkin]

The trouble is that China is still communist in most respects, meaning their leaders are much less susceptible to the will of the people [...]

That's not what communist means...

[cloudguy]

That's not what communist means...

OK, authoritarian.

[earlfoss]

I bet these tariffs are great for business in the mid to long term.

I reckon that some of the bike crap we all love is going to increase by 25%. Once people come to their senses and rescind the tariffs, you can bet that 25% increase that businesses put in place ain't going to go away. Maybe they'll even increase prices after the tariffs are gone and say that they've been hit so hard that they have to gouge you even more.

I wouldn't be surprised if businesses not paying tariffs that are in the same marketplaces as those that are, will increase their prices as well. Maybe 10%? Why not? Trek has already spouted off about how they're going to have to raise prices.

Either way, this seems like a great way to make more money.

[Avispa]

Yes, the fact that over a billion people are no longer dirt poor and starving is a sad state of affairs. Its called capitalism - not American style, of course, but capitalism none the less. I wonder if all those "enslaved" Chinese workers would prefer to go back to the good old days of starving to death.

I guess you gotta admire the Chinese for achieving something we have never been able to do here.

In the mean time, this:
https://waronwant.org/sweatshops-china

I rest my case... long live "capitalism"...

[MikeD]

Are you ready to pay more for your everyday items?
Part of the problem is that we like and are used to buying cheap stuff.
How much would you pay for an US made inner tube for example?


The problem with your argument is that China isn't the only source for tubes, which is true for most items I'd say. Their quality is also poor. Buy two tubes to get one good one. I'd rather pay more for better quality.

[Rada]

I guess you gotta admire the Chinese for achieving something we have never been able to do here.

In the mean time, this:
https://waronwant.org/sweatshops-china

I rest my case... long live "capitalism"...

The story in the link sounds a lot like how conditions were in the west at the beginning of the industrial revolution. Thank goodness for unions and that other socialist stuff.

[cloudguy]

The story in the link sounds a lot like how conditions were in the west at the beginning of the industrial revolution. Thank goodness for unions and that other socialist stuff.

Yes, here is a copy of an article from 1933 about labor conditions in Pennsylvania: https://socialwelfare.library.vcu.edu/programs/child-welfarechild-labor/children-strike/

Who knows what China will look like in 50 years, but my guess is that economic gains will be followed by improved labor conditions and standards, barring WWIII. The TPP, which Trump nixed, had provisions to ensure better labor practices in the developing member countries, which was at least one good thing about that trade agreement.

[bicycletricycle]

Would it be better if they all moved back to the country and lived on zero dollars a day? If they get poor enough perhaps they will return to Rousseau's state of nature and reach nirvana.

Every year after chinese new year millions and millions of people choose to go back to the "sweatshops" from their rural family homes. They could stay and farm but they don't. Are working conditions great in China? No. Is poverty being pushed back? Yes.


I guess you gotta admire the Chinese for achieving something we have never been able to do here.

In the mean time, this:
https://waronwant.org/sweatshops-china

I rest my case... long live "capitalism"...

[kevinvc]

The steel tariffs are blowing up a couple of projects I'm working on. Two vendors are refusing to take orders unless we adjust the price agreement. Both have shown documentation that demonstrates a legitimate need for up to a 40% increase. This will either reduce or altogether scrap some work that we've been planning for a couple of years and has ripple effects on other contractors who are counting on the work.

Real money, real jobs, real people.

[Jaybee]

The steel tariffs are blowing up a couple of projects I'm working on. Two vendors are refusing to take orders unless we adjust the price agreement. Both have shown documentation that demonstrates a legitimate need for up to a 40% increase. This will either reduce or altogether scrap some work that we've been planning for a couple of years and has ripple effects on other contractors who are counting on the work.

Real money, real jobs, real people.

Winning feels great. :rolleyes:

[MikeD]

The steel tariffs are blowing up a couple of projects I'm working on. Two vendors are refusing to take orders unless we adjust the price agreement. Both have shown documentation that demonstrates a legitimate need for up to a 40% increase. This will either reduce or altogether scrap some work that we've been planning for a couple of years and has ripple effects on other contractors who are counting on the work.



Real money, real jobs, real people.



So, why not use domestic steel?


Sent from my iPhone using Tapatalk Pro

[ColonelJLloyd]

So, why not use domestic steel?

The President seems to think it is this simple too.

[MikeD]

The President seems to think it is this simple too.



Yeah, well the steel tariff is 25%, not 40%, and everyone knows that labor makes up the highest fraction of a job cost, not materials, so I simply don't believe it.


Sent from my iPhone using Tapatalk Pro

[ultraman6970]

Whats the reason domestic steel cant be used?? I have not find an answer to that, or nobody in the press wants to touch the subject.


So, why not use domestic steel?


Sent from my iPhone using Tapatalk Pro

[cloudguy]

Yeah, well the steel tariff is 25%, not 40%, and everyone knows that labor makes up the highest fraction of a job cost, not materials, so I simply don't believe it.


Sent from my iPhone using Tapatalk Pro

Yeah, fake news, ugh? Gotta love this post-truth world we live in.

[JimmyTango]

Whats the reason domestic steel cant be used?? I have not find an answer to that, or nobody in the press wants to touch the subject.


I'll just take a wild guess and say it probably has something to do with the fact that STEEL IS REAL.

LOL

But really, I imagine it takes quite a lot to produce steel and with all the excess demand for domestic steel the supply chain is behind the ball.

I'd bet domestic steel production was humming along pretty efficiently... as in without a lot of excess time/ capacity/ ore delivery/ manpower/ supply-chain capacity just sitting around gathering dust ready to rock the moment Chinese steel hit a bump in the road... so now that there is an increased demand domestic producers have to find ways to increase production beyond their current capabilities. Again, I am just guessing but that is probably quite a long timeline. First they have to secure funds to invest in new infrastructure, manpower, and new ore orders, then they have to actually have the new infrastructure developed and built, all before actually starting to fulfill the new orders. Years I'd guess?

I'd also guess that taking the leap of faith to start investing in that kind of growth (which would be EXPENSIVE) with no guarantee of what the supply/ demand for foreign and domestic steel will look like once the new production is finally up and running makes raising the huge amounts of capital pretty scary.

At least, that is how I would look at it if I were producing a good that was suddenly in high demand. I work for a commercial construction company in the Bay Area, and although business in our area is crazy hot, we are seriously weary of bringing on more overhead than we can afford to handle when the market inevitably cools in 3-8 years.

[kevinvc]

[QUOTE=MikeD;2408423]So, why not use domestic steel?

I don't make the products, I'm trying to buy them. My understanding is that there is not enough material on the market right now, that domestic mills are being flooded with orders, and that the uncertainty has some manufacturers leery about committing to orders at the current prices in case the President carves out more exemptions, which could lower the market price.

All I know is that I am waiting for requested price adjustments next week with documentation to justify them.

[kevinvc]

Yeah, well the steel tariff is 25%, not 40%, and everyone knows that labor makes up the highest fraction of a job cost, not materials, so I simply don't believe it.


I'll give you the benefit of the doubt that you don't believe the justification for this percentage increase and not my statement that this is what the manufacturers I'm working with have told me. If it's the former, well, there isn't a 1:1 ratio between tariffs and manufactured price increase. I'll know more next week when they tell me exactly what adjustment they're requesting and why.

If it's the latter, I simply don't care.

[pbarry]

Back when he was a developer, the future President insisted on using Chinese steel on at least one building project because of the cost differential vs. domestic steel. His branded ties were also made there.

[Bruce K]

We’ve gone quite along way off from how the tariffs will affect bicycle costs/production.

It would be good if we could get back there.

Who are the current producers of steel tubes for bikes? I don’t remember too many tubes coming from China.

BK

[ultraman6970]

The closest is japan and japanese doubt have a single problem with numbers producing their stuff.

China probably produce tubes for cheap bikes but nothing fancy as the rest of the usual suspects like deda, columbus, tange/champion and reynolds or even mannesman.

[djg]

Also, the effect might be small but bicycle parts already not made in China will get slightly cheaper by comparison.

So . . . by comparison, you mean that they will be subject to lower percentage price increases, such that the retail price deltas will shrink, even though demand-side pressure will raise the price of competing goods that are not made in China too, right? Perhaps that's a sort of silver lining for those somewhere along the chain of manufacture and distribution for goods not subject to a tariff, but that seems cold comfort to the consumer. Or to domestic producers, distributors, and vendors of goods sourcing constituent materials or parts that may be subject to one or another tariff.

And, of course, there's a bunch of stuff on a bike, and component sourcing can be complex -- we're talking, for example, not just about a finished stem but about every part of the stem, and the materials going into every part of the stem.

It's quite a thread. I'm shaking my head.

[false_Aest]

I've been having a week-long conversation with a few industry folks in China about what's already happening as a result of the tariffs.

The best tidbit of info I've gotten is that there's a few smaller brands (names haven't been shared) that are already on the ropes and are asking for help from their MFGs. What does help mean? Lowering assembly cost, splitting up-charges for finding ways around the tariffs, etc.

Normally the MFGs and assembly factories would help but they don't seem to be willing to budge right now. Why? If a brand can't afford to produce then and it starts to go under a Chinese Co. can swoop in, buy them for cheap and then the MFG makes even better profit. Hurts for a season or two but things get better down the line.
---
The 2nd wonderful bit of info is that TEU (twenty foot equiv unit... think shipping container) from Taiwan is, as of last week, just as expensive as it was right before 2018 Chinese New Year -- its the same from other non-China ports. Prices will just rise from here through March. That 25% might end up being 30-35% depending on whats being shipped. Socks = 10,000s per container = NBD. Cargo Bikes = 200 per container = ouch.

---
The US will undoubtedly emerge VICTORIOUS from this battle. It will be the best battle that has ever been fought and it will have been waged by the best leader that has ever led. It will have been so amazing that tens of youths will sing Klingon battle hymns about its amazingness. It will be so amazing that we'll forget that we're probably worse off.

[oldpotatoe]

I've been having a week-long conversation with a few industry folks in China about what's already happening as a result of the tariffs.

The best tidbit of info I've gotten is that there's a few smaller brands (names haven't been shared) that are already on the ropes and are asking for help from their MFGs. What does help mean? Lowering assembly cost, splitting up-charges for finding ways around the tariffs, etc.

Normally the MFGs and assembly factories would help but they don't seem to be willing to budge right now. Why? If a brand can't afford to produce then and it starts to go under a Chinese Co. can swoop in, buy them for cheap and then the MFG makes even better profit. Hurts for a season or two but things get better down the line.
---
The 2nd wonderful bit of info is that TEU (twenty foot equiv unit... think shipping container) from Taiwan is, as of last week, just as expensive as it was right before 2018 Chinese New Year -- its the same from other non-China ports. Prices will just rise from here through March. That 25% might end up being 30-35% depending on whats being shipped. Socks = 10,000s per container = NBD. Cargo Bikes = 200 per container = ouch.

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The US will undoubtedly emerge VICTORIOUS from this battle. It will be the best battle that has ever been fought and it will have been waged by the best leader that has ever led. It will have been so amazing that tens of youths will sing Klingon battle hymns about its amazingness. It will be so amazing that we'll forget that we're probably worse off.

You forgot the 'ironic' or forehead slap emoji..

[rnhood]

If you average the tariffs of all the large industrialized nations, we would have to raise our tariffs even more than we are already have, just to have the average of the industrialized nations. So I think we are moving in the right direction with our latest policies and changes. As well, the trade deficit with China is huge. Really huge. This should have been addressed in the previous administration, but nothing got done.

[oldpotatoe]

If you average the tariffs of all the large industrialized nations, we would have to raise our tariffs even more than we are already have, just to have the average of the industrialized nations. So I think we are moving in the right direction with our latest policies and changes. As well, the trade deficit with China is huge. Really huge. This should have been addressed in the previous administration, but nothing got done.

REALLY don't want to start a political discussion but trade deficits are not a zero sum game. A country isn't 'losing' when it has a negative trade balance nor winning when it is positive.

https://www.forbes.com/sites/jeffreydorfman/2017/03/12/the-trade-deficit-matters-but-not-how-you-think/#26986e4d6058

[rnhood]

Everyone keeps saying we should have the same healthcare as all the other industrialized nations, well then, why can't we have the same tariff structure - whether we all have the same structure or we all get rid of them totally?

We are not being political here. My preference is to match the tariff structure, which should reduce the trade balance with China. Yours may be to do nothing. Just preference. Chances are, neither of us are totally right or totally wrong. I am certainly no expert.

Granted, Trump is unorthodox in the approach and tools he is using. However, Janet Evans has a swim form that was very unorthodox, in fact the antithesis of what is taught today by swim scholars and coaches. Yet she was extremely successful in competitive swimming.

[saab2000]

I'm certainly no expert on this topic but if my memory serves me correctly, the base issue goes back at least a couple decades and several administrations ago when China was granted Most Favored Nation trading status. This was quite controversial at the time and likely for good reason.

[oldpotatoe]

Everyone keeps saying we should have the same healthcare as all the other industrialized nations, well then, why can't we have the same tariff structure - whether we all have the same structure or we all get rid of them totally?

We are not being political here. My preference is to match the tariff structure, which should reduce the trade balance with China. Yours may be to do nothing. Just preference. Chances are, neither of us are totally right or totally wrong. I am certainly no expert.

Granted, Trump is unorthodox in the approach and tools he is using. However, Janet Evans has a swim form that was very unorthodox, in fact the antithesis of what is taught today by swim scholars and coaches. Yet she was extremely successful in competitive swimming.

Apples and zucchini..:eek:

[verticaldoug]

If you average the tariffs of all the large industrialized nations, we would have to raise our tariffs even more than we are already have, just to have the average of the industrialized nations. So I think we are moving in the right direction with our latest policies and changes. As well, the trade deficit with China is huge. Really huge. This should have been addressed in the previous administration, but nothing got done.

http://www.pewresearch.org/fact-tank/2018/03/22/u-s-tariffs-are-among-the-lowest-in-the-world-and-in-the-nations-history/

This article from PEW says applied rates are lower for Canada and Japan, about equal for EU. China and Mexico are higher. So I am not sure what data you are using.

I believe PEW Research is one of the least politically biased think tanks around.

I was with an Auto Exec this week. He said that steel and commodities already cost more to source in Mexico than the US, and any advantage for auto makers with lower labor costs was wash.

NAFTA already require 62% of auto value to be sourced in North America and that rises to 75% under the new agreement. It really seems that any victory is really marginal versus the potential negative impact a trade war will have.

[sg8357]

The tariffs are only tangentially about China, if they improve trade great.
The main thing is to show POTUS is doing something, and to reassure
the base he is great fighter. The people getting impacted are his base
mostly, so there is no downside from his point of view.

[gasman]

We’ve drifted away from discussion about tariffs on the bike industry and we’ve had a few political pokes so let’s close this thread. If there is more info as time goes on feel free to start another thread.