TRAVERSE CITY — The U.S. government on Friday threatened to more than double tariffs — from 10 percent to 25 percent — on a range of Chinese products worth $200 billion.
One of the affected items is electric bicycles, a product segment rapidly gaining popularity in Traverse City and across the U.S.
“They just keep going up, more and more,” City Bike Shop co-owner Steve Baesch said of electric bike sales.
City Bike Shop, 322 S. Union St., sold about 40 electric bikes in 2018, said Baesch. Other shops across northwest Lower Michigan also have seen accelerating sales in recent years.
Electric bikes are equipped with a battery and electric motor that can supplement pedal power to make cycling easier. They’ve proven especially popular with Baby Boomers who find cycling long distances more challenging as muscles and joints age.
Electric bicycles aren’t cheap, though some manufactured in China have sold for less than $1,000. Electric bikes made elsewhere — Japan or Europe, for example — typically retail for $1,500 and up. Targeted U.S. tariffs instituted last year, and the increased tariffs announced Friday, specifically affect products imported from China.
Electric bikes are just one product category subject to the higher tariffs.
The U.S. administration last summer began charging new import tariffs on billions of dollars of items from China, including consumer goods like furniture, seafood, luggage and handbags — and business supplies including chemicals, plastics and telecom equipment. Car companies now pay more for auto parts made in China, potentially raising new car prices. China quickly responded last year by increasing tariffs it charges to import many U.S.-produced goods.
A tariff is a tax. A U.S. tariff on electric bikes (or other affected products) from China is charged to the company that imports the merchandise. The importer pays the tax to the U.S. government. The importer — to maintain its profit margin — typically bumps up the price it charges the U.S. consumer.
The additional tariffs charged by the two governments mean that U.S. consumers will pay more for Chinese products, and consumers in China will pay more for U.S.-made merchandise. Tariffs, typically intended to combat unfair trade practices, raise prices and therefore discourage consumers from buying products from the target nation.
China already responded to Friday’s announcement of increased U.S. tariffs by increasing its own tariffs on $60 billion worth of U.S. products.
Many companies around the world produce and sell electric bikes. Only products made in China will be directly affected by the higher U.S. tariffs.
Bayfront Scooters, 140 E. Front St., sells and rents electric bikes made in Europe, so its clients shouldn’t see any effect from the tariff increase.
“All the bikes that I carry and sell are European,” said shop owner Charlie Lakritz. “When I rent a bike, I rent a $3,000 bike.”
Baesch, who owns City Bike Shop with his wife, Julie, said none of the electric bikes he sells are made in China.
But other area shops do handle electric bicycles manufactured in China.
Nick McLain at McLain Cycle & Fitness, 750 E. Eighth St., said the shop hasn’t experienced any direct effect of latest tariffs on electric bike sales or availability.
“It’s a possibility,” he said. “Nothing has really happened yet.”
Suttons Bay Bikes, 318 N. St. Joseph St., was forced to increase prices of electric bikes last year in response to the first round of tariffs. This year, it worked proactively.
“We’ve actually put in orders for bikes ahead of the deadline so we can get them in, and get them at a cheaper rate and be able to pass that savings onto our customers,” said Keith Conway, the shop’s sales and marketing worker.
“(Last year) some people wondered why we had two of the same bike models, one would be a lower price, one a higher price. One was ordered before the tariffs, one after. We don’t just mark them up. If it’s post-tariff we mark it accordingly, if it’s pre-tariff we mark it accordingly as well.”
City Bike sells electric bikes branded Giant, Electra and Scott.
“But none of those are made in China,” Baesch said. “Giant makes a lot of the bike brands like Trek. They might have several facilities where they make bikes at, whether it’s Taiwan, China or what have you, so they just change production. Originally ours were coming from China, that factory.
“The price did go up by $100, like two months ago. Since then it’s stabilized and hasn’t changed because it’s not coming from China now.”