It’s no secret that the bike industry has struggled to maintain profitability in the last few years — and now it will get even worse.
This spring, President Joe Biden’s administration announced a large increase in tariffs on Chinese imports to protect American manufacturers from a deluge of cheap products. However, the change will likely have the opposite effect on U.S. bike makers, especially those focused on e-bikes.
The administration removed a tariff exclusion for electric bicycles and children’s bicycles that had existed since 2018. As of June 14, these products now have an additional 25% tax to enter the U.S. The Biden administration has also proposed raising the tariff on batteries for e-bikes from the current 7.5% to 25% on January 1, 2025.
That’s a big deal for American bike sellers because so many components are constructed in China. In fact, China may make up to 86% of all bikes sold in the U.S.
Several U.S. brands have already announced price increases due to the tariff increase. As current inventories sell out in bike stores across the country, e-bikes will likely become even more expensive over the next 3-6 months, said John MacArthur, a sustainable transportation researcher at Portland State University.
“If you are interested in buying an e-bike, this is the time to buy it,” MacArthur told GearJunkie this month. “Even if you aren’t in a state with an incentive, they’re cheaper now than they will be in the future.”
E-Bike Brands Raise Prices
Some e-bike makers have already increased prices as a result of the tariffs.
Retrospec made the “very difficult decision” to raise prices on many of its bikes and e-bikes by 13%. Some Rad Power bikes now cost $200 more. Price hikes were also announced at Velotric, Aventon, Heybike, Himiway, Favato, and DYU.
“Our team is working tirelessly to minimize the impact of these tariffs on our pricing,” Aventon said in an announcement. “We have explored every possible avenue to absorb these additional costs, but the magnitude of the increase makes it unavoidable for us to adjust our prices.”
This trend will only continue the longer that Chinese-made e-bikes and batteries endure higher American tariffs, said Matt Moore, policy counsel for bike industry advocate PeopleForBikes. In a June 28 letter to the U.S. Trade Representative, PeopleForBikes requested that Biden’s administration reinstate the tax exemption for e-bikes and the lithium-ion batteries that often power them.
The group argued that the tariffs won’t significantly affect Chinese policy but will certainly hurt American consumers and the domestic bike industry. They would also be a blow to environmental policy focused on reducing greenhouse gas emissions.
“At a time when the world is looking for ways to decarbonize transportation, reduce greenhouse gas emissions, and improve quality of life in cities, increasing costs will disincentivize the purchase of bicycles and electric bicycles by consumers,” PeopleForBikes wrote in the letter.
Environmental Concerns
Environmental groups have long advocated for government subsidies of e-bikes and other electric vehicles to reduce carbon emissions.
Convincing Americans to make that shift will only become more difficult under the new tariffs. That’s according to MacArthur, who has studied the impact of subsidies for e-bike purchases. The e-bike research conducted by MacArthur and others at Portland State University shows that municipalities can effectively increase e-bike purchases through incentive programs.
But now, those incentives are simply going to offset the increased tariffs.
“They will still get people on e-bikes, but there will be less of them,” MacArthur said. “You’re either going to have to spend more, or your money will not go as far.”
However, not all environmental groups agree on how to address China’s dominance of the electric vehicle market. The Sierra Club, for example, supports increasing tariffs on China to help American workers.
“We cannot trade a dependency on foreign oil for a clean energy future reliant upon China,” Sierra Club executive director Ben Jealous wrote. “We must continue to invest and build our clean energy future in America.”
But that’s short-sighted, according to Dean Baker, an economist at the Center for Economic and Policy Research. In a blog, he wrote that low-cost electric vehicles from China will help slow greenhouse gas emissions.
“If China wants to subsidize this process, we should be thanking them,” Baker wrote.
Independent Bike Shops ‘Will Get Really Hurt’ by E-Bike Tariffs
While Biden intends for the tariffs to protect American workers, they could have the opposite effect on the country’s independent bike shops.
These mom-and-pop shops typically buy from U.S. importers, which pay the additional duty and then pass that extra cost on to retailers. According to Matt Moore and John MacArthur, this will almost certainly reduce local bike purchases across the country.
“The bike industry is really on the shoulders of all these independent bike shops, and they’re the ones that will get really hurt by this,” MacArthur said. “The industry won’t be able to build lots of e-bikes in the United States any time soon.”
The Donald Trump administration first initiated Increased tariffs on China in 2018. At the time, the e-bike industry successfully lobbied for an exemption — the same one that the Biden administration allowed to lapse last month.
With both Trump and Biden supporting the tariff increase, it’s unlikely the exemption will return any time soon, regardless of who wins the November presidential election.
A Public Safety Issue
But the tariffs won’t just hurt the bike industry — they’re also a potential blow to public safety.
Dangerous fires caused by e-bike batteries have become an increasing problem, especially in dense cities like New York. Many of these batteries come from China, which floods the U.S. market with cheap, unregulated products.
That problem will only worsen under the new tariffs, according to PeopleForBikes. Thanks to a U.S. trade rule called the De Minimis exception, products valued at $800 or less avoid import taxes and the usual customs process. So, the new tariffs will only reduce the number of safer, expensive e-bikes — not the cheap ones that tend to cause fires.
In fact, about 40% of all e-bike fires come from conversion kits for turning a normal bike into an electric one, Moore said. Despite causing a disproportionate amount of problems, China’s most dangerous bikes and batteries will continue to enter the country, he argued.
“Raising the tariff on e-bikes will not make them safer — just more expensive,” Moore said.
