WASHINGTON (BRAIN) — Singlespeed adult bikes and, apparently, e-bikes, have earned an unexpected reprieve from tariffs imposed by the Trump administration last year.
The U.S. Trade Representative published a list of Chinese products granted exclusions in the Federal Register on Friday. The list includes singlespeed adult bikes, motorized skateboards, and electric motorcycles. The electric motorcycle category apparently includes e-bikes, although BRAIN has not been able to confirm that with industry experts.
“Unfortunately we don’t have complete information at this time,” Alex Logemann, the director of state and local policy for PeopleForBikes, told BRAIN on Friday.
According to the Federal Register post, the exclusion applies to “motorcycles with electric power for propulsion, each of a power not exceeding 1,000 watts.” The HTS code for the products excluded is 8711.60.0050 or 8711.60.0090, according to the post.
The U.S. created those new HTS codes this spring, splitting the electric motorcycle category into 8711.60.0050 (with power not exceeding 250 watts) and 8711.60.0090 (“other”). Depending on their motor size, e-bikes fall into either of the codes, along with other electric motorized cycles.
One factor creating uncertainty among industry experts: records show the exclusion was granted at the request of an electric motorcycle importer, Burromax. The exclusions announced Friday apply regardless of whether the importer filed an exclusion request. But oddly, several e-bike importers requested an exclusion for the same HTS code but were denied. Those who requested the e-bike exclusion include Magnum, Rad Power, Allco, Neutron Holdings, and Uber. There was also a request for exclusion on behalf of the e-bike industry by PeopleForBikes and the Bicycle Product Suppliers Association.
The disparity makes some wonder if the exclusion was meant to apply only to electric motorcycles.
“Right now we don’t want to say definitively one way or another,” Logemann said.
Single company requests singlespeed exclusion
The singlespeed exclusion applies to products imported under the HTS code 8712.00.2500. They must weigh less than 16.3 kilograms (36 pounds), have wheels larger than 63.5 cm (25 inches), and clearance for tires no wider than 4.13cm (1.6-inch) — essentially adult single speed bikes with relatively narrow tires. This category of bike was included in a round of 10% tariffs announced Sept. 24 last year. The tariff on those product increased to 25% in May 2019, and it was set to increase to 30% next month.
The bikes were previously subject to a 5.5% tariff, which was added on top of the 25%; it will return to 5.5%.
State Bicycle Co. requested the exclusion, public records show. By coincidence, Mehdi Farsi, the co-founder of State Bicycle, told BRAIN on Thursday that the company is moving some of its production out of China to Taiwan to avoid the tariff.
The company sells 10-20,000 bikes a year in this category. In addition to consumer direct sales, State sells through several hundred dealers.
In his letter to Lighthizer last year, Farsi said the bike industry does not face serious challenges with Chinese counterfeiting or theft of intellectual property. He said there was “no way” his company could shift its supply chain to avoid the tariff.
In the request for exclusion (a separate document from the public letter), State Bicycle said “The closest country capable of making this product is Taiwan. However the cost is over 40% higher and a large amount of the components they are using are imported from China to assemble these bicycles … We have attempted to source these from Taiwan but we see that many of the components being used are from China anyway and the extra cost of the Taiwan labor and Taiwan components being used is in excess of 40% of the cost we were previously paying.”
According to the USTR, exclusions were granted after weighing:
“(w)hether the particular product is available only from China and specifically whether the particular product and/or a comparable product is available from sources in the United States and/or third countries.
• Whether the imposition of additional duties on the particular product would cause severe economic harm to the requestor or other U.S. interests.
• Whether the particular product is strategically important or related to ‘‘Made in China 2025’’ or other Chinese industrial programs.”
The exclusion period is from Sept. 24 last year, when the tariff was first imposed, through Aug. 7, 2020. Importers will be able to get back the tariff payments they’ve made over the last year, although it’s not clear how that process works.
Other items of interest to the bike industry that earned exclusions: skateboards with electric motors of no more than 250 watts; some electric motors; digital pressure gauges; some bearings; some GPS units; and hand tools including rotary cutters. Of interest to bike retailers with a festive bent: Christmas lights and tiki torches were granted exclusions.
Manufacturers were given an opportunity last year to make public testimony about the tariffs and the USTR also established an exclusion request process, which continues until Sept. 25 on the tariffs imposed in September last year.