As of June 14th, e-bikes coming from China are now subject to a 25% tariff. This change stems back to Section 301 of the Trade Act of 1974, which was used by former President Trump to justify tariffs placed on China in order to protect U.S. firms. Those tariffs have continued under President Biden. A provision that exempted e-bikes and their parts from these tariffs expired on June 14th, 2024 after being extended multiple times.
What’s changing?
The expired exemption affects the imports of e-bikes, children’s bikes, and some carbon fiber frames and water packs. In May 2024, the Biden administration announced new tariffs on Chinese goods, including a 100% levy on electric cars. They also announced that e-bikes would be subject to a 25% tariff beginning in 2026, but the Section 301 exemption expiration means that this change has already taken effect.
The previous tariff for Chinese e-bikes and their parts was 7.5%, less than a third of the current tariff. The listed prices of e-bikes have already started increasing to make up for the difference.
Where is the policy change coming from?
The Biden administration is concerned with the entrance of cheap Chinese-made electric vehicles into the American market. Their arrival could harm the U.S.’s own growing EV industry and eliminate American competition in the EV space.
China can afford to make electric cars and vehicles cheaper than the United States because they have access to a lot of the raw materials needed for lithium batteries and their manufacturing is cheaper than the U.S. The U.S. is hoping to combat the cheap prices of Chinese EVs by placing high tariffs on them. Unfortunately, e-bikes are getting caught in the cross-hairs.
There is some pushback on the e-bike tariffs. The non-profit PeopleforBikes is calling for e-bikes to be exempt from Biden’s 2026 tariff. Blumenauer, a US representative from Oregon, has proposed a bill to exempt component imports for bikes from tariffs for 10 years and tax credits for domestic bikes, incentivizing US assembly.
What does this mean for the e-bike industry?
E-bike sales in America struggled to take off initially, but then peaked in 2022 with 1.1 million e-bikes being sold. This was quadruple the number of e-bikes sold in 2019. Since 2022 e-bike sales have been fluctuating.
One of the major setbacks to the industry is the affordability of e-bikes. Several cities around the U.S. like Denver and Chicago have instituted cash voucher or rebate programs to help make the bikes more accessible, bringing costs down to as little as $250-500. However, these programs have not proven very effective in helping people who otherwise wouldn’t be able to afford a bike as 80% of those who bought bikes through the programs have said that they would have bought the bike without rebates.
Many current e-bike companies use Chinese parts, or are simply Chinese bikes with an American logo. Increased tariffs will cause these prices to rise. Although some bike companies have stockpiled bikes pre-tariff, there just isn’t the manufacturing capacity in the U.S. to rely on domestic supply.
While electric vehicles manufacturers have been ramping up domestic production for several years and receiving government subsidies, the e-bike industry has not had the same support or the longevity to build infrastructure for domestic production. In the long run, supply chains are likely to diversify and more companies will build their bikes in America. But in the short term, prices will rise as companies adjust to the new tariff.
It is probable that many e-bike companies, particularly ones that sell cheap bikes from China, will go out of business. Be careful who you buy your e-bike from, as warranties mean nothing for a bankrupt business and parts and repairs will become more difficult when the company no longer exists.
To read more, you can visit the following websites:
https://www.theverge.com/2024/5/29/24166934/ebike-battery-china-tariff-price-increase-biden-climate
https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions
https://crsreports.congress.gov/product/pdf/IF/IF11346
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