china trade deal dead ? Permanent tariffs ?

[Deleted member 4210]

Sunday afternoon Trump tweeted that tariffs on $200 billion of goods will go from 10% to 25% on Friday.

Ebikes were already at 25%, but bikes were at 10%. It's likely bikes will now be participating of that $200 billion that goes to 25%.


Unless this is an 11th hour negotiations tactic, this could mean a lot of ebike OEM 's who chose to gamble and hold prices (absorb tariffs) hoping the trade spat would not last long, could be forced to concede and pass on those costs to consumers.

I could be wrong, but if I were a betting man, prices will be going higher on a lot of brands that didn't raise prices previously.

 

[pnop]

Free trade baby!

 

[Deleted member 4210]

Free trade baby!

Trump has a LOT of leverage right now, with US economy sizzling along, super low unemployment (lowest on record for many minority groups too) and a FED that has paused raising rates. China can't say the same for their economy, and it's stock market has been in the tank going on for more than 3 years since it peaked in 2015, and before that much higher peak in 2008 (down 50% since). Their market has bounced since early this year (on optimism they were going to get a deal done), but that will likely now turn tail.

 

[Timpo]

I remember somebody on this forum saying that 25% tax on Chinese products will only encourage corporations to move their production plants to Vietnam, Phillipines, Malaysia or Thailand.

 

[Deleted member 4210]

The proposed deal in concept was a big fat nothing burger. China cheats on every trade deal, so unless the US has sole power to decide if the deal is being violated and impose consequences, it's essentially a non deal. As one example, China has NEVER reported it's state subsidies to Huawei to the WTO as required by that treaty. There are hundreds of violations by China on every deal or treaty they've ever signed. Global Corporations who are smart will move their production out of China. China has a very severe dichotomy. There is the developed coast with most of the wealthy. But the interior has 600 million impoverished citizens still in rural areas. China claims and uses the impoverishment to demand trade deal 'breaks.' But then only their current wealthy benefit. They can't have things both ways. Either they are a developed nation (massive military, space program, etc), or they aren't. So they can't keep claiming all the 'breaks ' given to developing nations. They keep saying they are a superpower, yet they demand breaks only given to the poorest countries. And they can't keep brazenly flouting every deal, and get a free pass for ever. If they want to have their currency become a 'reserve currency ' they have a LONG way to go on both keeping to all treaties and promises they make, and then most importantly becoming a net importer. You can't have a reserve currency and be a net ( and massive) exporter. It's financially impossible. And you must develop deep and liquid capital markets and they'll never ever get close to that, as no global investors will ever go near their horrid economic policies and constant cheating, it theft, and on and on.

Good luck to Trump if he can get a deal, but any and all of the above is going to take eons to change, and complete 180 by China in their insolate attitudes on the world stage.

 

[Acey]

Sunday afternoon Trump tweeted that tariffs on $200 billion of goods will go from 10% to 25% on Friday.

Ebikes were already at 25%, but bikes were at 10%. It's likely bikes will now be participating of that $200 billion that goes to 25%.

I could be wrong, but if I were a betting man, prices will be going higher on a lot of brands that didn't raise prices previously.

This tariff will effect every bicycle part on the shelves of every LBS and every company that assembles their own bikes from parts. From brake cable casing to chains and components, everything that's made by the big manufacturers in China (Shimano etc.) will now have a 25% consumer tax instead of 10%. I was among those paying half the tariff and passing half. My margins are too low and this was the straw that broke my back. Hope is lost. Some of my e-bikes are tariffed at $250 because they are expensive to build. Cost of inventory replacement is ridiculous, insurance goes up because inventory value is higher and cash flow is a much larger problem when ordering 3+ months out. By the way, tariffs are on the manufacturing cost, not the suggested retail. I set my prices than add the 1/2 tariff on top. Some manufacturers add it to cost of manufacturing and it gets doubled (online) or tripled (brick and mortar). I would hope more would treat it as a pass-through amount and not revenue source, but everyone that touches the bike in the distribution gets a cut...

 

[NatPedaler]

I remember somebody on this forum saying that 25% tax on Chinese products will only encourage corporations to move their production plants to Vietnam, Phillipines, Malaysia or Thailand.

Actually, this has been going on since the trade war started.

 

[Alex M]

China cheats on every trade deal, so unless the US has sole power to decide if the deal is being violated and impose consequences, it's essentially a non deal. .... You can't have a reserve currency and be a net ( and massive) exporter.

Yes, and yes.
The deal is nothingburger if you can't impose consequences. Besides, there is China's traditional way of responding to any sanctions with disproportional retaliation extending to any related and unrelated sectors, the only guidance is to hit where it hurts.
As to the Yuan becoming a world reserve currency, this would take not only more importing but also less govt currency manipulation, - neither thing is likely to happen in the foreseeable future.

Moving plants out of China? Sorry Nat, but this has been going since BEFORE the trade war started. They have been moving it (and/or buying plants and farmlands in addition to those in China) to any country with low wages, for at least 20 years.

 

[City Commuter]

At the end of the day these tariffs simply equal money out of the American consumers/workers pockets, and into the governments pockets.

 

[Deacon Blues]

At the end of the day these tariffs simply equal money out of the American consumers/workers pockets, and into the governments pockets.

That's true, but what other options does the government have? The one major positive effect the tariffs may have is this would encourage companies to start moving their production to other Asian countries that don't have the 25% tariff and sell their goods at a substantially lower price, compared to China.

 

[rich c]

That's true, but what other options does the government have? The one major positive effect the tariffs may have is this would encourage companies to start moving their production to other Asian countries that don't have the 25% tariff and sell their goods at a substantially lower price, compared to China.

Don't you mean that Chinese and American owned companies will build factories in minor Asian or African countries and still maintain high profits? Once these tariff prices get listed, how many do you think will go back to cheaper pricing when they relocate the factories?

I ordered two Shimano cassettes last night before any new tariffs are applied.

 

[Deacon Blues]

I'd like to think they'd lower their prices to get more sales, but you're probably right.

 

[tomjasz]

Moving plants out of China?

The exodus is growing as a direct result of the trade war. It's not very easy for a Chinese National to up and move a factory.

 

[NatPedaler]

My opinion, this trade war ordeal is not done and will continue. Eventually, they will have a mutual agreement on both sides but the question here is how long are we as "consumers" will be suffering. Hopefully, it is not going to be too long.

 

[AlanDB]

The farmers who overwhelmingly voted for Trump are beginning to get quite tired of the tariffs (along with their other woes from climate change and immigrant labor crackdown). The election is 18 months away with campaigns already going into high gear. So my guess is the China tariff/trade debacle will need to get cleaned up in the next few months. Trump can't afford to lose all those reliable rural voters.

 

[Dionigi]

The farmers who overwhelmingly voted for Trump are beginning to get quite tired of the tariffs (along with their other woes from climate change and immigrant labor crackdown). The election is 18 months away with campaigns already going into high gear. So my guess is the China tariff/trade debacle will need to get cleaned up in the next few months. Trump can't afford to lose all those reliable rural voters.

A sad state to be hostage to Trump’s deal making. Maybe the farmers will realize we have a two party system.

 

[Chopperbill]

Don the deal maker will get e’r done. RadPower dropped the tariff and are selling bikes like hot cakes. Dealing with tariffs and not ramming the consumer with it all can be done.

 

[tomjasz]

Dealing with tariffs and not ramming the consumer with it all can be done.

Sadly that's not true. Parts and kit resellers are taking a bath. Close margins mean it gets passed on. We're very worried about the future.

 

[pnop]

A sad state to be hostage to Trump’s deal making. Maybe the farmers will realize we have a two party system.

Maybe everyone will realize we have more than a two party system.

 

[AHicks]

I believe it's all politics, but business experts whose opinions I trust, say we are making way past due progress on a sore spot issue that's been around for quite a while. That in mind, I suffer quietly, without complaint. Hopefully egos will be massaged, an agreement made, and everyone lives happily ever after.

And yes, when it comes to politics, I PREFER to remain a little naive.