E-bikes, like this one crusing on the Eastbank Esplanade, have become very popular in Portland. A new tariff could chill the market.
(Photo: Will Vanlue for BikePortland)
“Our forecasts predict that a 25% tariff will cause a 65-75% drop in sales as consumers postpone their purchases until sanity returns to our trade policies.”
— Wake Gregg, The eBike Store
In their ongoing effort to achieve more “fair and balanced” trade conditions with China, the Trump Administration has finalized a list of $16 billion worth of products that will be hit with a 25 percent tariff that will go into effect August 23rd.
Among those products are electric bicycles and e-bike motors. Bikes imported from China previously had no tariff. The tariff on motors will be 29 percent as the new tariff will be added to the existing one 4 percent. People for Bikes, a national bike industry advocacy group, fought the move, but has so far been unsuccessful.
This is bad news for the e-bike market. As we shared last week, sales of the pedal-assisted bikes have been a major bright spot for bike companies and retail shop owners. Here in Portland, we have a thriving e-bike scene and shop owners report brisk sales. There’s been a sense that — after years of challenges due to an educational and cultural bottleneck — the U.S. market for e-bikes had finally matured. And like many bike trends, Portland is at the tip of the spear.
Here are reactions to the new tariffs from three local shop owners:
Rich Fein, Cynergy E-Bikes (3838 SE Powell Blvd)
How would you describe interest in e-bikes in Portland in general?
E-Bike sales are definitely on the rise this year – more than we expected. In addition, we see that the attitudes towards e-bikes have changed dramatically over the 4+ years we’ve been in business. At the start, people were unfamiliar with them, and the “cheating” stigma was common. Now they are recognized and supported as a serious alternative to cars.
What impacts will the tariffs have on your business?
It’s going to impact some of our suppliers more than it will impact us. Some of our suppliers have their bikes built in China, some in Taiwan and some in Viet Nam. Those that have their manufacturing tied up in China will be the ones to take a hit because they won’t be as price competitive as those who source in other Asian countries.
What happens next?
I don’t see e-bike sales slowing down, or at least not very much. There are a few companies who sell real cheap e-bikes on-line – all fully sourced from China. As their prices rise, it could drive some shoppers to higher quality brands.
Anything else you’d like to add?
If the intent of the tariffs is to create manufacturing jobs in the U.S., I don’t see that happening for e-bikes. Suppliers who are manufacturing in China will just shift more production to other Asian countries. The higher-quality suppliers have been doing that gradually. This will just accelerate that.
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Wake Gregg, The eBike Store (809 N Rosa Parks Way)
How would you describe interest in e-bikes in Portland in general?
The eBike market is really growing in the US and in Portland. If I were to encapsulate the growth I would say that this year is the year that sales hit the much sought after curve in the hockey stick. Lots of room for growth, but the market is really booming.
If you look at the stories about e-bikes, the press has stopped writing the tired story heralding that, “Maybe this is the year of the e-bike.” Feedback I hear from most folks I talk with is, “I’m seeing e-bikes all over the place!”
What impact will the tariffs have on your business?
93% of all bikes sold in the US are made in mainland China. 5-6% are made in Taiwan. Without a doubt, tariffs will have a large, negative impact on our business. There will be some exceptions, but by and large, consumers will simply postpone purchasing an electric bike. Our forecasts predict that a 25% tariff will cause a 65-75% drop in sales as consumers postpone their purchases until sanity returns to our trade policies.
The companies that will be hit the hardest are traditional IBDs [independent bicycle dealers]. They are in the middle of a perfect storm. Increasing rents. Increasing commercial interest rates. Difficult labor market with increasing wages and decreasing pool of applicants (know any mechanics looking for work? eBike Store is hiring!) and a significant drop in high end road bike sales and increasing direct-to-consumer sales.
We have already seen quite a few bike shops fail, the tariffs may well be the final blow for some time honored Portland bike shops.
What happens next?
Hard knocks are nothing new. Our customers experience hard knocks all the time. Some have overcome tremendous physical challenges – strokes, multiple sclerosis, COPD, Lung cancer — just to name a few. It is an honor to serve folks who refuse to let life’s blows keep them from fully living their values.
Trade wars are new territory for me. My company’s hope of surviving is simply to provide as much value to each customer as we possibly can. We are betting the farm on the belief that our current customers and future customers will see the value in having a team of experienced and committed mechanics — with a sizeable inventory of in stock service parts – to keep them rolling.
We are fortunate that 3 of our 4 top brands are made in Europe (Gazelle and Kalkhoff) or Taiwan (Specialized). Our product mix will adjust to market conditions when/if the tariffs hit.
Kelly Aicher, Bike Gallery (six locations in the region)
How would you describe interest in e-bikes in Portland in general?
The interest is growing every year, and the market has definitely expanded in all categories of e-bikes.
Are e-bikes a significant portion of your shop’s business?
They have been the fastest growing bike category in the industry for the past few years, and are becoming a more important part of our business and the future of riding for many.
Do you think the tariffs will impact that business?
I think it will definitely have an effect. Major bike brands have been doing a great job creating more value for the dollar in high quality e-bikes over the past 2 years, and this has the potential to erase those gains with higher prices. This will likely slow the growth rate in the category nationwide.
What do you think will happen next?
My best guess is the retailers’ already low margins on e-bikes will drop (the bike manufacturers and the retailers will likely both absorb some of the additional cost) and prices will still have to go up. A 25% tariff on an e-bike, and 29% tariff on motors can only result in higher prices. It remains to be seen how quickly brands will respond to the increases, and how quickly the increases will be passed onto dealers and consumers.
People for Bikes isn’t done fighting this. Their next move will be to galvanize voices in hopes of receiving an exclusion to the e-bike tariff. If that works, their next fight will be against a separate 10 percent tariff on a slew of common bike parts that would drive up the price of your next purchase.
If you work in the local e-bike industry, feel free to share your thoughts in the comments.
To learn more about the issue, check out their “Say no to bike tariffs” website.
— Jonathan Maus: (503) 706-8804, @jonathan_maus on Twitter and jonathan@bikeportland.org
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