An update on PeopleForBikes' federal trade and tariff work.

Last year, PeopleForBikes published our 2021 Trade Policy Agenda, outlining the U.S. bicycle industry’s policy recommendations for Congress and the Biden-Harris administration, and shared it across Washington, D.C. While a majority of our advocacy work focuses on boosting infrastructure funding and increasing access to and for bikes, trade policy holds a lot of influence over the availability of bikes, parts and accessories in the U.S. Now eight months later, here is an evaluation of our work to advance our top goals: 

Replace the Section 301 Tariffs With More Targeted Actions

At the end of 2020, the last remaining pieces of Section 301 tariff relief expired. In practical terms, this meant substantial tariff increases on critical products such as children’s bikes, electric bicycles, helmets, lights and more. Every bicycle product imported from China now faces a Section 301 tariff and most are subject to an extra 25% duty. 

We are actively advocating for Section 301 reform in Congress and there’s momentum on Capitol Hill to address Section 301 tariffs, not only by reforming the process but also creating a new process going forward. In June, the Senate passed the bipartisan Endless Frontiers Act, a massive science, technology and competitiveness bill that included several positive provisions on Section 301, including automatically renewing all expired tariff exclusions for 18 months, providing retroactive recovering of duties for some products that were excluded and creating a new, mandatory exclusion process. This would include all bike products for which duties increased after December 31, 2020. While the House of Representatives has not taken up the mantle to move this or similar legislation, we anticipate it will rise up on their agenda after they tackle infrastructure policy and a budget resolution. 

While President Biden and his administration have touted the benefits and potential of U.S. manufacturing and production, his administration’s actions so far have yet to offer any meaningful incentives for onshoring or supporting existing made-in-the-U.S. operations. At PeopleForBikes, we are continuing to consult the industry on policies we could support to meet the goals of the current administration.

Renew the Generalized System of Preferences

The Generalized System of Preferences (GSP) provides tariff relief for imported goods from developing nations. The last authorization for GSP expired on December 31, 2020, so the program remains lapsed.

We have been emphasizing the importance of renewing GSP to our Congressional allies for nearly two years, and there are signs of progress. The Endless Frontiers Act in the Senate also included a renewal of the Generalized System of Preferences through January 1, 2027. The reauthorization would be retroactive to December 21, 2020, allowing importers to recover tariffs on goods from GSP countries that were paid this year. If the bill moves through the House and becomes law, it would reform the GSP to promote human rights, the environment, women’s economic empowerment and other international goals of U.S. trade policy. It would also require the U.S. Trade Representative to review whether GSP countries are complying with these requirements more frequently. 

In the House, Democrats and Republicans are aligning behind two separate bills to renew GSP that differ in specific details. 

Work With Congress and Our Trade Allies to Pass a Free-Trade Environmental Goods Agreement

We continue to promote the concept of a free-trade agreement for goods that promote environmental sustainability and/or health and wellness — for which bikes are well positioned. Lawmakers should make it easier for Americans to purchase products like bicycles, electric bicycles and other bicycle products that help lower carbon emissions and enhance their well-being by facilitating the movement of these goods through an international free-trade agreement. While this issue is unlikely to see near-term movement, we continue to emphasize the importance of this issue to the United States Trade Representative. 

Work With Congress to Amend the De Minimis Shipment Rules

The De Minimis shipment rules provide duty-free treatment for shipments valued at $800 or less. This includes avoidance of Section 301 tariffs. These rules provide a substantial cost advantage to foreign retailers and disadvantage businesses that have a physical presence in the U.S. It also provides an easy avenue for products that don’t comply with required safety standards to reach Americans.

While De Minimis reform continues to remain elusive, PeopleForBikes continues to press Congress and the United States Trade Representative to support changes to De Minimis shipment rules, namely lowering the threshold for imports and ensuring that American consumers can purchase safety products like helmets that meet rigorous testing regulations. 

The Miscellaneous Tariff Bill (MTB) provides tariff relief for products that lack a domestic manufacturing base. The most recent MTB, which provided limit relief for bicycle products such as disc brakes, expired at the end of 2020. Led by PeopleForBikes, our industry substantially increased its engagement in the administrative process that determined what products were included in the MTB in 2019 and 2020. This resulted in a significant expansion of products recommended for relief in the next MTB in the 2020 report issued by the U.S. International Trade Commission. We are now awaiting the final step in this process, which requires Congress to pass a bill containing those recommendations.

The Endless Frontiers Act in the Senate included the 2020 recommendations, which would go into effect until December 31, 2023. It also reauthorized the U.S. International Trade Commission to issue recommendations for two additional cycles of MTB relief, starting in 2022 and 2025. We’ll continue to push the House to pass these recommendations.

Significant progress has been made on key bike industry trade issues in 2021, and we anticipate that several of our priority issues will see successful outcomes. We anticipate that Section 301 reform, GSP renewal and passage of the MTB are questions of when — not if. While the details of Section 301 and GSP remain uncertain, there is significant pressure on Congress and the Biden Administration to act. PeopleForBikes will continue to press our agenda forward with the goal of securing several big wins for the bike industry in 2021.

Looking for a way to help? We need to make sure Congress hears the bike industry’s trade priorities loud and clear. Click on one (or all) of the links below to send a message to your elected officials about some of our key issues:

CALL ON CONGRESS TO RENEW THE GENERALIZED SYSTEM OF PREFERENCES

URGE CONGRESS TO PASS THE MISCELLANEOUS TARIFF BILL

How Movement on Trade Policy Is Affecting the Bike Industry

PeopleForBikes is dedicated to promoting pro-bike trade policies that support bike businesses, keep Americans riding and make bikes and bike products accessible to as many people as possible. 

We recently sent our 2021 trade agenda to President-elect Biden’s transition team, which included aggressive goals for reversing the harm bike businesses continue to endure under Section 301 tariffs. 

The bicycle industry has been deeply affected by every major recent tariff dispute and sanction, making planning difficult for bicycle suppliers, led to depleted inventories and driven up prices nationwide. Thoughtful trade policy will be critical for the continued success and growth of the U.S. bike industry. PeopleForBikes is actively pushing for tariff exclusions and policy reforms that create a more predictable and rational culture of trade policy in Washington, D.C. and we are proud to share our vision for U.S. trade policy with the new administration.

Domestic trade policy for bicycles should support seven key principles that provide economic, environmental and health benefits for Americans. 

Create Certainty: Fluctuations in U.S. trade policy limit investments in the future of the bike industry and harm customers. Trade policies should foster stability so that U.S. bike companies can plan their supply chains, align production with demand, invest in business expansion, hire new employees and increase wages.

Provide a Fair Playing Field: Sudden tariff increases of 25%-100% dramatically depress the economic success of the bike industry. Duties function no differently than changes to other cost inputs or taxes. When they increase, the companies paying those duties are less profitable. These cost increases select winners and losers, threatening the free market. 

Promote Domestic Growth: Participation trends for the U.S. bike industry are strong, and sound trade policy can help promote that growth even further. Our policies should encourage bike companies to invest in U.S.-based production and support small business bicycle dealers.

Leverage Opportunities to Achieve Climate Change Goals: Bicycling provides one of the most efficient modes of reducing carbon emissions from the transportation sector. Our trade and tax policies should recognize the potential of the bike to help achieve these goals.

Improve Public Health: Bicycling will not only help achieve environmental objectives, but make Americans happier and healthier in the process. U.S. trade policy should align with efforts to improve mental and physical well-being and reduce rising healthcare costs.

Increase Youth Participation: Young bike riders represent the future of the U.S. bike industry. Children’s bicycles and critical safety equipment must remain available and affordable for the long-term stability of the bike industry.

Encourage Investments in Developing Countries: The U.S. is a leader in helping other countries build stronger economic foundations. The bike industry can help America achieve this goal with policies that support investments in developing nations.

Read the entire agenda here. We look forward to sharing the progress we make with the new administration in the new year. 

PeopleForBikes is Advancing a Pro-Bike Trade Agenda in Washington, D.C. in 2021

Our goal at PeopleForBikes is to get more people riding bikes more often. Usually, this means working with communities, states, or the federal government to provide safer, more accessible places to ride so that every American has the opportunity and ability to bike where they live.

During the last five years, we’ve expanded our work in a variety of ways, including tackling international trade and tariff policy. In August 2017, the U.S. government launched an investigation into the trade practices of China — focusing primarily on the theft of intellectual property and forced technology transfers. This investigation and subsequent report became the basis for imposing heightened tariffs on imported goods from China, leaving many products and industries that have no connection to the underlying intellectual property or technology concerns, including bicycles, caught in the crossfire.

To maximize leverage in this trade conflict, the U.S. raised tariffs on products imported from China considerably— 25% above the normal rates for many goods, bicycles included. Unfortunately, most complete bicycles are already subject to a significant base tariff of 11% (well above the average weighted tariff for a U.S. import of 2%) and this increase brought the total tariff rate on most complete bikes to 36%. We knew there would be no way for bike companies to manage a cost increase of this magnitude without one of two consequences: 1) raising prices for consumers; 2) internalizing the cost and placing their businesses in jeopardy.

The vast majority of bicycle products sold in the U.S. are imported from China, including nearly 95% of all complete bicycles. As the U.S. Trade Representative began imposing the higher tariffs in 2018, we recognized the results would be harmful to all of our constituencies at PeopleForBikes:

Manufacturers and suppliers: Higher costs of importation and challenging searches to identify new potential suppliers outside of China.

Dealers: Eroded margins as brands and shops struggle to maintain sales in the face of more expensive imported goods.

Bike riders: Higher costs as the tariffs are incorporated into the retail price of goods.

None of these outcomes are good for American bike companies or people who bike. Even companies that manufacture frames domestically and build complete bikes in the U.S. rely heavily on imported components to create their finished products. By 2019, every bicycle product from China was slapped with a higher tariff— no business was immune to the effects of these policies.

The PeopleForBikes policy team has aggressively engaged at each stage of the tariff process. We objected to the higher tariffs at every hearing and public comment opportunity provided by the U.S. Trade Representative and explained the harm that new tariffs could cause. For nearly two years, these efforts provided nothing but frustration. Minimal tariff relief was provided. However, we stuck to our strategy and continued to seek tariff exclusions for bicycle products.

We knew from the beginning that the effects of the tariffs on certain product categories would be particularly dramatic from both an industry and customer perspective. Kids’ bikes were an area that became a primary focus of our trade advocacy.

97% of kid’s bikes sold in the U.S. come from China, so we were acutely concerned about the effect that higher prices could have on sales, and in turn, youth participation. Prices and margins on these products are relatively low, so the tariffs were likely to be passed on to the purchasers of bicycles quickly in the form of higher prices making them less accessible to many Americans. Bicycles also compete with an ever-expanding universe of electronic toys, gadgets, and screens to attract the interest and attention of our youth. Therefore, the cost of a bike is under constant comparison to an increasingly wide range of alternative forms of activity and amusement.

As this last point highlights, concerns regarding youth engagement in bike riding expand far beyond trade policy. Only 53% of kids ages 3-17 reported riding a bike in the last year, meaning we already lack a connection with nearly half of young Americans. PeopleForBikes has invested heavily to ensure that kids find safe, fun, and accessible places to ride. We have steadily supported the National Interscholastic Cycling Association, an organization focused on putting more kids on bikes through school-based mountain-biking leagues. We are partnering with USA Cycling, the national governing body for bicycling, to create a Youth Cycling Initiative specifically aimed at increasing youth participation and helping young Americans sustain bike riding throughout their lives. We know this is good for the long-term health of our industry and we believe it’s the right thing to do. More kids on bikes means more kids being active, engaging in healthy activities, and experiencing the outdoors. We saw the threat of higher tariffs posing new and unnecessary obstacles to achieving this vision.

Given these factors, we invested significant resources in filing exclusion requests for each category of kids’ bikes which fall under one of three different headings of the U.S. tariff schedule depending on their wheel size: less than 20”, 20”, and more than 20” but less than 26”. We filed an exclusion request for each of these categories and coordinated with bicycle brands to facilitate or assist in helping them file exclusion requests as well.

In December, those efforts were finally rewarded when all three of our exclusions for kids’ bikes were granted. The exclusions are retroactive to the date on which the tariffs were first imposed, Sept. 24, 2018, and will remain in effect until August 7, 2020. While this reprieve is not permanent, we estimate it will save the U.S. bike industry $120 million in extra duty payments that can either be reimbursed or completely avoided in the future. Bike purchasers will save even more.

While trade issues may seem outside the traditional work of PeopleForBikes, ensuring that Americans can affordably and easily access bicycles is critical to the future of bike riding in our nation. Currently, only half of Americans have access to a functional bike. This is one of the largest obstacles to people riding bikes more often, and it is a particularly significant barrier for women, older people, and lower income populations. If we want bike riding to thrive, we must maintain easy and unrestricted access to bicycles.

This battle does not end with kids’ bikes. We’ve made several other exclusion requests that remain pending, including those for adult bicycles. While each circumstance is unique, the reasons for providing relief to these products is equally as compelling as kids’ bikes in many ways. We’ll keep working to achieve similar positive results on these requests to further our mission of ensuring all people in the U.S. can bike easily and conveniently.

Tariff relief for kids’ bikes – a big win for young riders, family budgets and the bike industry

Despite newly implemented tariff increases on e-bikes imported from China and recently confirmed tariff increases on Chinese bicycle products, there’s good news on the trade front.

Last week, President Trump signed the Miscellaneous Tariff Bill Act of 2018 (MTB) into law, which includes tariff relief for some bicycle products. The bill had passed the House and Senate without any significant opposition. The last MTB expired on December 31, 2012, and Congress has been unable to pass another bill until now (after reforming the process for considering individual product categories in coordination with the International Trade Commission).

This MTB temporarily reduces or suspends import tariffs and includes 11 products from within the bicycle industry — including disc brakes, zee cages, speedometers and stand-up bicycles. This is a win for bike businesses, especially as we aggressively fight tariff increases on hundreds of other products.

It is important to note that the MTB only impacts the general rates of duty for covered articles. The MTB does not change or otherwise impact Section 301 duties (the two rounds of increases approved in August and September).

Amidst Trade War, Some Good News on Tariffs

E-bikes are the fastest-growing segment of bicycle sales in the United States. During the last 12 months, e-bike unit sales jumped 112 percent.* Ridership and engagement is increasing, and people across most demographics are using e-bikes to replace motor vehicle trips or augment existing bicycle trips.

But growth in e-bike sales and usage is under threat. On June 15, the Trump administration released a list of products imported from China that they’re considering for a 25 percent tariff increase. E-bikes are included on this list, as most e-bikes sold in the U.S. are manufactured in China.

What does this mean for people who bike and the bicycle industry?

If imposed, a 25 percent tariff increase would likely lead to higher retail prices for e-bike purchasers. For example, an entry-level e-bike retails for $1,500. A 25 percent tariff could produce a $375 price increase, which may push many potential purchasers out of the market. The burden is even heavier for high-end e-bikes, which could face up to a $2,000 price jump as a result of the increased tariff.

What can be done to prevent this 25 percent tariff?

The administration and Congress need to hear from everyone affected by these tariffs—e-bike manufacturers, retailers and riders. PeopleForBikes and its allies in the bike industry will voice opposition to the increased tariffs; we ask you to join us in taking action by using the links below.

Bike riders and bike supporters, click here.

Updated 7/11: This week, the administration released a new proposal that would increase the tariff on nearly every other bicycle, component and accessory imported from China by 10 percent. If approved, these significant tax increases will affect every level of our industry’s supply chain, from manufacturers to dealers and, ultimately, customers. Stay tuned for additional information on these tariffs and instructions on how you can take action.

Updated 8/2: On Tuesday, the administration announced that they are considering increasing the proposed tariff on bicycles, components and accessories to 25 percent. The proposal includes items like chains, rims, spokes, pedal, breaks — even helmets. If implemented, this tariff could increase duties on the bike industry by an estimated $250 million, resulting in higher costs for retailers, suppliers and customers.

Proposed Tariff Increases Mean Bad News for E-bikes

This month, the Trump administration announced two changes to trade policy that may affect a wide range of companies that manufacture or import bicycles, parts and accessories. The first change relates to new tariffs on imports of raw steel and aluminum, while the second is focused on new tariffs on products imported from China.

On March 8, the president announced new tariffs on imports of specific types of unfinished steel and aluminum. The new rates are 25 percent on imported steel and 10 percent on imported aluminum. According to the administration, these tariffs are needed because the United States is highly dependent on foreign producers of raw steel and aluminum, posing a threat to our national security interests. The European Union, Canada, Mexico, Australia, Argentina, Brazil, and South Korea are exempt from the tariff increase.

The increased tariffs apply to specific codes within the Harmonized Tariff Schedule (HTS). With respect to steel, the relevant HTS codes are:

Broadly speaking, these codes include a range of ingots, flat-rolled products, bars and rods, angles, shapes, sections, wires, semifinished products, rails, fish-plates, sole plates, tubes, and piping made or iron or nonalloy steel, stainless steel or other alloy steel.

The following HTS headings are subject to the new tariffs on imported aluminum:

These codes generally include bars, rods, profiles, wire, flat-rolled products, tubes, pipes, fittings, castings, forgings and unrought aluminum.

The practical implications of these changes remain to be seen. Some bicycle wheel manufacturers import material covered by these HTS codes, but may not be the only bike businesses affected by the tariff increase. Even for those companies that source their raw materials from within the U.S., an uptick on prices for foreign steel and aluminum may translate to higher prices from domestic sources as well.

The administration has also outlined a process by which companies may apply for an exemption from the tariff increase if a steel or aluminum import is not produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality. Those procedures are available on the Department of Commerce’s website, here.

In the second major initiative, the United States Trade Representative announced a process to consider new tariffs on products imported from China. This process arises out of an investigation that the administration launched in August 2017 into Chinese trade practices under section 301 of the Trade Act of 1974. While the primary focus of this investigation has been focused on technology and intellectual property, higher tariffs on consumer products are also now part of the discussion with respect to potential penalties.

On Thursday, March 22, the administration unveiled a public process to determine what products might be subject to new tariffs. According to the announcement, a proposed list of products imported from China that could face higher tariffs would be released within 15 days, or by April 6. That list would then be open to public comment for at least 30 days.

The list of products that may face higher tariffs is unknown at this time. The administration is using a computerized algorithm to identify penalties, which may include listing specific HTS codes that will be subject to new tariffs. We understand that the products under consideration are not limited to technology-related goods, such as electronics, and may include a wide range of consumer products. We will update the industry if bicycle products are included on the proposed list of tariff changes scheduled for release on April 6.

On April 3, the United States Trade Representative announced a proposed list of products that would be subject to a 25 percent tariff if imported from China. While none of the core bicycle HTS headings are included on the proposed list of tariffs, the list does include other items that may be relevant to our industry such batteries, motors, and machinery. A full list of HTS classifications included in the proposal is available here. The proposal will be open for public comment (in writing) through May 11, 2018.

We are continually seeking input from companies in the bike industry with respect to how these tariff changes will affect your business. Please contact us to let us know if these policies will have a specific consequence by contacting policy directors Katy Hartnett and Alex Logemann.

This week, the administration released a new proposal that would increase the tariff on nearly every other bicycle, component and accessory imported from China by 10 percent. If approved, these significant tax increases will affect every level of our industry’s supply chain, from manufacturers to dealers and, ultimately, customers.

Read more about the proposed tariff increases and take action.

Topics

Trade and Tariffs

PeopleForBikes at Work on Trade and Tariffs

News

How Movement on Trade Policy Is Affecting the Bike Industry

PeopleForBikes is Advancing a Pro-Bike Trade Agenda in Washington, D.C. in 2021

Tariff relief for kids’ bikes – a big win for young riders, family budgets and the bike industry

Amidst Trade War, Some Good News on Tariffs

Proposed Tariff Increases Mean Bad News for E-bikes

Section 301 Tariff Investigation