What tariffs mean for A-D Bikes and the US Bicycle Industry

Rough roads ahead

The US bicycle industry is still reeling from a pandemic induced oversupply of bikes. Now, it is entering an era of protectionism. Meanwhile, multipolarism is becoming fashionable again which makes a blockade of Taiwan by China no longer seem like a laughable threat. For an industry that imports 95 percent of its products from China, Taiwan, Japan, Vietnam, Cambodia and depends heavily on the confidence of the consumer, this is not good news.

Steel yourself for Liberation Day

Tariffs on bicycle products were increased to 25 percent in 2022 from 4 percent previously. They are set to increase again on “Liberation Day” and may reach as much as 55 percent by the time the dust settles, according to People for Bikes, a trade group. Regardless of where tariffs end up, the damage has been done both to producer and consumer confidence. The effect will be more industry consolidation among small and medium sized bicycle companies; a decreasing supply and more limited selection of bicycles; a return of component and accessory shortages; and, rising prices for everything related to cycling.

Made in the USA sometime in the future

The long term objective of these tariffs is to incentivize domestic and foreign companies to manufacture their products in the United States. This is a noble ambition and one that A-D Bikes has always harbored. But the reality is that the Big Three bicycle companies have no capacity for producing bicycles at scale in the United States today and they will not have any for a very long time. It is also hard to see foreign bicycle companies investing in production capacity in the United States anytime soon. Over the years, I asked my Chinese and Taiwan suppliers to consider setting up a carbon fiber manufacturing facility in the US. Even the promise of first mover advantage, tax incentives, good food, lots of space and warm weather could not persuade them.

Our Tariff Moment

A-D Bikes got the memo about import duties in 2022 when we wrote a large check to US Customs for import duties due on carbon framesets we imported from our suppliers in China. That was our Tariff Moment and marked the end of our carbon fiber frameset business. Since then, we have developed our own domestic production capability by retaining Handz Bicycles to produce our gravel frame in the same way we worked with our Chinese suppliers with carbon frames. It is without question very satisfying to have production capacity on shore, in the same time zone and handled by professionals who know their trade and add value to the process. There are many other benefits in addition to not paying tariffs. 

From the shadow of tariffs

But the tradeoff is that for now and the immediate future our product offerings will be limited by what can be made domestically. That means more steel frames or perhaps carbon tube to tube frames (no more aero frames or time trial frames). It depends entirely on who we can partner with. What is certain is there are no companies making open mold or proprietary carbon fiber frames and forks at scale in the United States. Not yet any way. What we are looking for are partners who want to invest in production capacity that will manufacture carbon framesets domestically. The expertise is here and so is the space, the capital and the market (we have a perfectly good brand). The hope is that a domestic bicycle industry that makes high quality frames and bikes from the latest materials will grow out from under the shadow of these tariffs. History does not suggest that this will be the case but at this point it feels better to try to create a new future than to sit around complaining about what has been lost.