Trump steel and aluminium tax >>> bike prices?

[padonbike]

I'm rather surprised that nobody else has posted something on this .... so I will.
First off, does the 25% tariff on steel and 10% on Al include products or just raw material?

Scenario 1: you have a US bike manufacturer who is buying in ready welded Al frames (or even fully assembled bikes) from the Far East, that are then subject to a +10% tariff, making them more expensive to buy for same spec both in US domestic market and other export markets.

Scenario 2: you have a US bike manufacturer who is buying in Tange steel and Al tubes from Far East, that he then welds into frames and assembles into bikes in the US. There is still the 10% tariff on the Al so the bike, like Scenario1, costs more in the US and in export markets, despite a considerable amount of welding, assembly etc. man hours occuring in the US.

Scenario 3: you have a US bike manufacturer who is using US Easton tubes. He is welding and assembling the bikes in the US. Although his bikes are no cheaper they suddenly become more competitive in both home and export markets.

Scenario 4 (dare I?): this US bike manufacturer has traditionally exported his Easton tubes to his FE manufacturing plant for reasons of cheaper labour. He continues to do so but he now has to pay import tariff on returned frames/bikes so his bikes are no longer competitive in the market place.

Any ideas???

[Asposium]

Option 5: none of the above happen; however, gives an excuse to put up prices.

[voodoo_simon]

In reality, most bikes that I’ve come across (mainstream brands) are made out in the east and shipped to Europe from there.

Most of the mainstream USA brands don’t set foot in the USA (but will no doubt be proven wrong in the next post )

[fatbikephil]

Both Jones and Surly frames have already rocketed up in price over here before the trump tax so god knows what this will do to them.....

[restlessshawn]

5. All bikes get more expensive, even those made of carbon

[restlessshawn]

In reality, most bikes that I’ve come across (mainstream brands) are made out in the east and shipped to Europe from there.

Most of the mainstream USA brands don’t set foot in the USA (but will no doubt be proven wrong in the next post )

Hey my Ritchey is proudly made...oh in Taiwan

[padonbike]

[quote]Most of the mainstream USA brands don’t set foot in the USA[quote]
Good point. Hadn't thought of that.

[stevenshand]

As far as I'm aware, the new levy is on 'unfinished' raw material. When this very same tax was tried in the (George W) Bush era, most large scale stockholders and importers could avoid the levy by simply including an additional line on the import documentation. This could be as simple as trimming size or removing millscale (normally an operation that would be done when the material landed in the US anyway).

Tubing, components (dropouts etc) imported into the US will not incur any more duty than now as they are 'finished' or 'processed' goods. I guess tubing manufacturers based in the US buying imported Chinese steel or stock from mills who source the raw material from China could see price increases and pass them on to the consumer.

In this new duty, almost everyone suffers other than the US government who profit from the additional tax. The idea is to encourage US manufacturing to use US sourced raw materials. It may well do this but it will cost more and those costs will be passed down the supply chain. You could argue that the employees of the steel mills in the US will be better off as they will have more secure employment.

What is likely is that the countries that these tariffs are supposed to target (specifically China) will retaliate by increasing import duty of US materials (and finished goods) entering these countries. That will hit US exporters.

Some of the smaller boutique bicycle brands manufacturing in the US may have to increase prices if their raw material comes from a source that doesn't originate in the US.

I don't think we'll see much in the way of increase to the consumer in 95% of bicycle goods. As voodoo_simon says most of the US branded bikes never go anywhere near the US.

[padonbike]

Nice insight there, thanks Steve!

[slarge]

Whilst the prices of nice bikes will only go up, I suspect the real cause is labour cost (which I imagine is about 90% of the manufacturing cost of a frame) and exchange rates. With the £ as weak as it is, that probably accounts for many price hikes we see in the UK.

The Trump tax will be seen as a reason for price hikes, but in reality there will be bigger forces coming into play.

[bearlymoving]

Interesting stuff. Soma frames are shipped via California, rather than direct to Europe, so they'd be a good barometer were there to be an effect. From what Steve and Steve have said, it sounds like it's not going to be a big factor though.

[JohnClimber]

It's been signed off today

http://www.bbc.co.uk/news/world-us-cana ... ws_central

[rufus748]

My understanding from my daughter (studying politics) is that his signature effectively means nothing. It still had to be passed by Congress (?) and as his party only had a majority of one he's unlikely to get this (or pretty much any of his wacky ideas) through.
Given the huge backlash from both sides of the house to this I don't think it's likely.
So she tells me........

[jameso]

Unread postby voodoo_simon » Sun Mar 04, 2018 7:31 pm

In reality, most bikes that I’ve come across (mainstream brands) are made out in the east and shipped to Europe from there.

Most of the mainstream USA brands don’t set foot in the USA (but will no doubt be proven wrong in the next post )
http://singlespeedsimon.wordpress.com/
voodoo_simon

Posts: 1966
Joined: Fri Apr 26, 2013 8:05 pm
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Re: Trump steel and aluminium tax >>> bike prices?
Unread postby htrider » Sun Mar 04, 2018 7:34 pm

Both Jones and Surly frames have already rocketed up in price over here before the trump tax so god knows what this will do to them.....

Jones do go via the US but are finished frames so unaffected by this, so do QBP bikes as far as I'm aware. Trek, Spesh etc have distributors who take stock direct from Asia.

Trump's signature on this is his way of looking good personally in eyes of his core voters, he can then blame the rest of the process/world/stamp his feet via twitter if it doesn't go through. Probably what half his policy ideas are based on - him.

[rufus748]

My understanding from my daughter (studying politics) is that his signature effectively means nothing. It still had to be passed by Congress (?) and as his party only had a majority of one he's unlikely to get this (or pretty much any of his wacky ideas) through.
Given the huge backlash from both sides of the house to this I don't think it's likely.
So she tells me........

Turns out he's used an old law passed during the cold war that was designed to protect national security......?!
So yes he has done it much to the annoyance of many democrats, republicans and many other countries but it can still be overturned in court a bit like the travel ban etc...

[johnb]

My understanding from my daughter (studying politics) is that his signature effectively means nothing. It still had to be passed by Congress (?) and as his party only had a majority of one he's unlikely to get this (or pretty much any of his wacky ideas) through.
Given the huge backlash from both sides of the house to this I don't think it's likely.
So she tells me........

Turns out he's used an old law passed during the cold war that was designed to protect national security......?!
So yes he has done it much to the annoyance of many democrats, republicans and many other countries but it can still be overturned in court a bit like the travel ban etc...

Seriously? Travel ban and tariffs are not the same thing or remotely linked. If he is saying they are dumping, typical Chinese behavior then he should introduce tariffs. Introducing them against all countries will result in