Looking to join the Alaska fatbike craze? Buy quick.
A billion dollars worth of bikes and bike components are the latest of made-in-China goods to be hit by Trump tariffs, and some – possibly many – fatbikes are in the mix.
Prices are sure to go up, Speedway Cycles owner Greg Matyas said today. Matyas is the man credited with pioneering the fatbike as riders know it today, and his Fatback brand bikes are well-known in the cycling world.
Luckily, he said, Fatback frames are still sourced in Taiwan. So they will avoid being hit by the new tariffs which Bicycle Retailer reported will start at 10 percent beginning Monday and ratchet up to 25 percent on Jan. 1.
Unluckily, Matyas added, lots of bike parts – handlebars, derailleurs, cranksets, wheels and more – are made in China, so Fatback could end up facing tariffs on the many parts that come together to form a complete bike.
Matyas didn’t expect “a big impact on my pricing…but in the short-term, prices will rise,” he said. “And who knows how long this will remain in effect.”
James Stull at 9:Zero:7, another Alaska bike manufacture with production in Asia, could not be immediately reached. Both Fatback and 9:Zero:7 do their design work in Alaska, but get their frames built overseas.
Matyas once tried to sell made-in-America fatbikes, but the numbers wouldn’t work.
“The wholesale cost was as high as the retail cost for a competitor,” he said. “The consumer would have to decide they’re willing to pay significantly more for it to pencil out.”
Despite a lot of people saying they want to a buy made-in-America products, he added, nearly all of them balked at the “signficantly more” payment. Taiwanese manufacturers once faced a similar problem.
The Taiwanese later moved some operations back to the home island to improve quality control and focus on high-end bikes. But a lot of the bike business remains on the Chinese mainland.
Today, manufacturing comes from a blend of frames and parts manufactured in both countries. Shimano, a company that began in Japan and is today one of the best known names in bike parts, now has a big factory near Shanghai.
Through the 2000s, China was generally considered the site for mass-produced budget bikes, while Taiwan remained the place for mid- and high-end bikes. But that has shifted in the 2010s.
That spiffy, $2,899 Salsa Beargrease Carbon fatbike at REI – the one touted as preferable for “the superlight chassis?”
Bicycle retailers dealing with bikes often made with a mixture of parts from China and Taiwan were going a little bonkers Tuesday amid reports of the new tariffs.
“The short time frame before the tariffs take effect means that suppliers will face an unexpected 10 percent charge on imports that are already in transit but arrive after next Sunday,” Bicycle Retailer reported.
The tariffs can only cause more problems for a slumping bicycle market. Shipments of bikes to retailers were down about 74,000 units through July, according to Bicycle Retailer, althought revenues were up slightly thanks to growing sales of expensive, battery-powered “e-bikes.”
PeopleForBikes, an advocacy group, blasted the new tariffs as “a $250 million annual tax increase. Considering that 94 percent of complete bicycles sold in the U.S. are imported from China, the practical consequences of this announcement will mean higher prices for nearly every American that purchases a new bike.
“At PeopleForBikes, we are deeply concerned that this increase will risk domestic jobs, slow the growth of bike ridership in the United States, and make bicycles less affordable for the millions of Americans who look to bikes for transportation and recreation.”
Gone, gone, gone
The U.S. once had a thriving bike manufacturing business, but it is long gone with the exception of boutique builders producing, handmade custom bikes. They are enjoying something of a rennisassance with mass-market manufacturers now gone to Asia.
China and Taiwan own the market for mass-produced bikes. Cannondale, a well-known American brand and one of the last of the made-in-America holdouts, started moving its manufacturing facilities to Taiwan in 2009 and was largely gone from the U.S. by 2014.
“Around 99 percent of bicycles sold in the United States are imported from China and Taiwan,” according to Statista.com, which tagged 2016 China exports to the U.S. at more than $3 billion. Fatbikes were a tiny, tiny fraction of that business.
In his official White House statement, President Donald Trump said China has forced him to impose the tariffs.
“After a thorough study, the USTR (U.S. trade representative) concluded that China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property – such as forcing United States companies to transfer technology to Chinese counterparts,” the statement said. “These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy.”
Matyas – who like many in the bike business knows too well the propensity of the Chinese to steal designs, copy them and sell other people’s intellectual property as their own – was skeptical the tariffs will do much to help the U.S. economy.
Average Americans, he said, just don’t want to pay what it would cost to provide for companies to make a profit and pay U.S. work a livable wage to produce bikes.
“Would I like to see manufacturing coming back?” he asked. “Yeah.
“But do I think it ever will? No…Nobody’s willing to pay for it.
He noted the huge disparity that now exists between Chinese labor costs and U.S. labor costs. Even with a 25 percent tariff, he said, a Chinese knockoff of a U.S. carbon fiber fatbike frame would probably be cheaper than a name brand U.S. frame.
A no-name, Chinese, carbon fatbike frame with fork could be bought on Ebay today for a cost of $539 with free shipping to the U.S. A 25 percent tariff would boost that cost to $673.75, still well below the $1,299 cost of a Salsa Beargrease carbon frame and fork.