> Let’s do the math: Take a kid’s bike that retails at a big box store for $ 150. Let’s assume that bike costs $ 30 to make. The rest of the cost is shipping to the U.S., warehousing, transport to the store, marketing, admin costs, customer service, warranty, retailer profits, etc. Whether the bike is made in China, Vietnam or Cambodia, the new 34-38% tariffs will increase the cost by ‘only’ $ 10-12. (The old tariffs are already part of the pricing.) Add overhead and capital costs on those $ 10-12 (financing and insuring the higher purchase price, etc.). Now the price goes up by $ 15-20, or about 10-13% of the final price of the bike.
That's a great explanation of the direct impact of tarriffs for a business like this.
These blanket tariffs are less about protecting/encouraging domestic manufacturing and more about renegotiating trade. At this current framing ("reciprocal tariffs") there is an implication that they are short term. The negotiations with Canada and Mexico demonstrate a tic-for-tat game theory in effect.
Without introducing the tariffs as a long term position businesses will be less inclined to do the capital expenditure to manufacture in the US, even for businesses within the margin (mostly manufacturing with high energy inputs and low supply chain requirements) where it would be economical.
This is also assuming no one along the supply chain will take advantage of the situation to put some more money in their pocket above the tariff (be it out of greed or uncertainty)
It's astonishning that we are discussing a price hike of asian made mass-market products (effectively your entire Amazon or Wal-Mart inventory from floor to ceiling) of 10% or more, and that's "just 10-13%" now? As if that alone wouldn't be felt more than the 2008 financial crisis in the pockets of Americans.
Note two limitations to the maths (I'll admit that I haven't read the OP in detail).
1. That's assuming that shipping, warehousing, transport, etc. do not rely upon foreign imports, including services. Chances are that more than one link in the supply chain will be hit either by the US tariffs or by the actual reciprocal tariffs from the other end [1].
2. That's also assuming that the tariffs will not have an impact on the sales of the company, which might adapt either by decreasing its margin (to increase sales) or by increasing it (either to try and compensate for lost sales or because it feels like the right time to hike prices).
[1] We shouldn't let ourselves be fooled by the word "reciprocal tariffs" used by Donald Trump. All these numbers are bogus. In January, EU tariffs on US goods were about 2-3%, not 39%, just as US tariffs on most EU goods.
> That is a factor that’s often overlooked: The Civic Type R—and also many high-end bicycle components—barely make sense from a strict business perspective. ... International trade has made it possible to pool the global demand for such niche products and make them all in one place, achieving economies of scale that make them (almost) cost-effective.
This is such an interesting insight that would never have occurred to me and seems to have a lot of explanatory power.
Of course there are enormous benefits to globalization: economies of scale, efficiency and lower prices, quality from specialization (wine from France, beer from Germany, etc), increased competition, etc. To think protectionism will benefit the economy is ignorant.
The global system of free trade and human rights has been the most free, prosperous, and peaceful era of humanity by far. Whole nations lifted from deep poverty, such as China and India (with still more to be done!). Incredible prosperity for the wealthy. Freedom, self-determination, democracy and human rights as the global norms.
Why are we throwing it away again? Much could be done to reform it, but we'll just throw it out?
If your country outlaws slavery and child labor, but imports freely (i.e. without tariffs) from countries which allows it, why does your country even have those laws? It’s certainly not to protect children or people from slavery; they’ve just exported the negative effects to other countries.
Because we haven't figured out how to square allowing people the freedom to work in the industries they please, no matter where in the world that industry has found itself, with allowing countries to strictly limit who is allowed inside its borders.
The "just learn to code" message never sat well with those who have no interest in coding and now they are rising up to try and take back, so to speak, the work they actually want to do. The far reaching consequences that go along with that are not of their personal concern.
Mostly we're reducing it's spread. Countries don't want to rely on others for a core set of industries. Also culturally I think being good at one or two things is unhealthy. My 2 cents.
This – eliminating costs and other negative effects of transportation – is one of the major reasons people started living in large cities, instead of spreading themselves out in small tribes across the land.
With the huge differences in per-country tariff, there seems to be a large incentive to reroute and relabel imports. E.g., build a bike frame in China, export it to a sister company in Japan, and export it to the US from there, claiming production in Japan. How effective are existing controls against that? (And what are they even, I'm ignorant.)
I assume that if it’s done at scale it will change trade balance and middlemen country will see their import taxes rise. It actually creates self interest for countries to prevent this behavior and block such activity as it will hurt genuine export.
It's trivial to get around these rules. Northern Irelnd is (or was at some point) a country of origin for both the EU and the UK. So a company could produce something in Greece, ship it to Dublin within the EU, then truck it to Belfast in Northern Ireland, and export it to the US with a UK certificate of origin.
There are import/export costs that make such routing impractical other than for smaller volume, high cost items.
The other thing is that customers buying high end items care about where it was made, so you need to inform them. (Passing off the bikes as being manufactured in Japan but in fact the frame was made in China, would be a big blunder.)
If people find hacks around the rules, they will use them if cost effective. I'm reminded of a train that used to shuffle freight a few hundred meters in order to qualify the goods for cheaper 'shipped by rail' taxes. But I can't find the article :-(
You forgot the part about going from China to Japan and the associated costs.
It could be cheaper? Could also be more expensive as well.
In any case, if too many people play that game, then it only raises the tariff on Japan. I wouldn't assume these tariffs are fixed. They seem to be tied to trade deficit. So..
yeah.
No real way around them over time.
Might even piss the US government off if you try that. Which is kind of like playing with fire right now. It's not clear to me that this administration believes in rule of law in the strict sense that everyone adhered to in the past.
This assumes the difference in tariff stays consistent while you are setting up your multinational supply chain. The truth is that nobody has any idea what Trump will say tomorrow, never mind next quarter.
When I read this I wonder if everything is a negotiating tactic:
"Trading partners have repeatedly blocked multilateral and plurilateral solutions, including in the context of new rounds of tariff negotiations and efforts to discipline non-tariff barriers."
The supply chain impact on manufacturers in the US on contracts is overlooked in this tariff fiasco. For example - auto manufacturers enter into long term agreements as a fixed price for a product. The only negotiation point they may have to reset that price would be a government action, which a tariff checks the box. The genie is out of the bottle, lots of contracts will be negotiated and prices will go up.
I would like to think this is some kind of 4-d chess game to avoid rate hikes and to devalue the dollar, but on implementation it will accomplish none of the above with a sprinkle of recession.
Specialized is manufacturing in Taiwan (i.e. they use Merida IIRC?), but Trek manufactures at least partly in China AFAIK, Canyon frames are made in China (unless things changed recently).
Generally, many brands like e.g. Trek manufacture their highest end in Taiwan, but a lot of the mid- to high-level frames are still made in China, admittedly things might have changed since I last looked into this ~5 years ago.
Considering their bikes start at $15K, "everyone" is unlikely to be able to afford it.
I love to buy local, and I love to cycle, but what I can afford is $2K. Which is why I'm still riding the same Kestrel (full carbon w/ SRAM Force drivetrain) I got on Craigslist 8 years ago for $700, and on which I've since replaced a number of components, but have still spent < $2K overall. A comparable bike new these days would be at least $5K.
I don't like carbon but I tend to prefer supporting USA and Taiwanese manufacturers. I'd love to see more domestic fabrication.
I was/am going to buy an Otso titanium frame, but they're made in Taiwan. Depending on the final price adjustment due to tariffs, it might actually be more cost effective for me to buy a Moots (made in America) frame to build.
It's the enshittification of the US economy, in a way:
The method of enshittification, as I understand it, is to create businesses with a moat that prevents competition, cheapen the product in every way possible, and squeeze as much rent out as possible. Also, extract as much as possible via debt.
The tariffs are the moat. The debt I don't need to explain (though Dems aren't great with it either).
It's all the opposite of competitive business and free markets.
An excellent summary that applies to many other small industries. Too bad the Trump Administration economists didn't read this article before coming up with their tariffs plan (of course considering its stupidity, especially in how the tariffs were calculated, it's plausible no actual economists were involved).
An essential question is, what is the political angle for Trump and the right wing? They know what they are doing. They know it will cause economic calamity.
They often seek to create calamity and crisis - with Covid; spreading fear (of immigrants, etc.), hatred and violence; disrupting health, education, and housing; international peace and security (NATO, Ukraine, etc.). You never see them spreading calm and peace - crisis seems necessary to their movement.
Tanking the economy does the same thing, but it is a much bigger step that impacts many of their supporters. What is their exit plan?
I expect part of their plan is to blame others: They will blame Democrats somehow, and other political enemies - it doesn't need any basis because the Dems don't have any effective means of refuting it to the public; whatever the GOP says becomes reality. I suspect they'll use it to ramp up hatred and fear, blaming their current objects of hatred such as immigrants, minorities, certain religions (a traditional object of blame, the right has already been normalizing antisemitism and general prejudice - which makes antisemitism inevitable. Rogan recently hosted a conspiracy theorist blaming Jewish people for 9/11, for example - how long before does he blames them for the economy, 'undermining President Trump'), liberals, etc.
I've been thinking about this same thing. Trying to figure out what the endgame is with all of this. I can only come to one meaningful conclusion. Preparing for a future war with China. In that context, everything starts to make sense. The whole point of these tariffs is two pronged. One, make the rest of the world pick a side. And two, attempt to disconnect global dependence on China.
Making America "stand on its own two feet" would give it a lot of freedom in making choices that are at odds with future super powerful China that is no longer benevolent.
> Making America "stand on its own two feet" would give it a lot of freedom in making choices that are at odds with future super powerful China that is no longer benevolent.
The idea that relationships reduce your independence is almost childish, like a 18 year old who things they tie you down and they'll go it alone in life. It's through relationships that people - and nations - have power. The US by itself can't afford to do much. Now the, again, vast network of US allies - including in that theater Japan, South Korea, the Philippines, Australia, to an extent India - share the burden.
> freedom in making choices that are at odds with future super powerful China that is no longer benevolent.
The US has disconnected itself from China for years now. China has little influence politically in the US.
What happened was China became extremely nationalistic, threatened and abused everyone, and the US moved in and allied with all its new enemies.
However, as the US becomes extremely nationalistic, threatening and abusing everyone, China is now moving in and building relationships. It's their own back yard, so it is hard to compete if you act like just another nationalistic dicatatorship.
> In that context, everything starts to make sense.
In that context, a lot of it does not make sense. Why the threats about annexing Canada or Greenland? Why the tariffs and extremely hostile rhetoric towards all allies? If you are preparing for a war, the stupidest thing you could do is to alienate your allies and push them toward your adversary. China is already approaching the EU, and I am sure they are negotiating with other key players too. China even agreed on a joint response to the tariffs with Japan and South Korea. Let that sink in - China, together with Japan and South Korea!
> One, make the rest of the world pick a side. And two, attempt to disconnect global dependence on China.
Logically this may well push many to greater trade with China.
China has a growing middle consumer class already greater in number than the total population of the USofA. China already has global scale manufacturing in place, now looking for fresh markets as US markets lower demand due to tariffs.
Smaller countries, say Australia, can trade their wagyu beef to China now that the US has tariff'd the US demand down towards zero .. in a number of ways the US has removed itself from global trade which will continue on with or without it.
The tech-right of musk, thiel, vance, andreessen etc are enacting the "reboot" envisioned by curtis yarvin, he wrote about it calling it "the butterfly revolution" iirc. The rest are just trying to roll back 80 years of social change along with reestablishing segregation but as national policy this time.
And yeah I think your read on how they'll manage the fallout of this is correct.
I think you’re right, and they’ve found their useful idiot in Trump.
As for Trump himself, I think he truly believes the rest of the world is taking advantage of the US and tariffs are a way of setting things right. My guess is that in his view, the country (or at the least the rich people he cares about) will benefit from all this.
Readit News
That's a great explanation of the direct impact of tarriffs for a business like this.
Without introducing the tariffs as a long term position businesses will be less inclined to do the capital expenditure to manufacture in the US, even for businesses within the margin (mostly manufacturing with high energy inputs and low supply chain requirements) where it would be economical.
1. That's assuming that shipping, warehousing, transport, etc. do not rely upon foreign imports, including services. Chances are that more than one link in the supply chain will be hit either by the US tariffs or by the actual reciprocal tariffs from the other end [1].
2. That's also assuming that the tariffs will not have an impact on the sales of the company, which might adapt either by decreasing its margin (to increase sales) or by increasing it (either to try and compensate for lost sales or because it feels like the right time to hike prices).
[1] We shouldn't let ourselves be fooled by the word "reciprocal tariffs" used by Donald Trump. All these numbers are bogus. In January, EU tariffs on US goods were about 2-3%, not 39%, just as US tariffs on most EU goods.
This is such an interesting insight that would never have occurred to me and seems to have a lot of explanatory power.
The global system of free trade and human rights has been the most free, prosperous, and peaceful era of humanity by far. Whole nations lifted from deep poverty, such as China and India (with still more to be done!). Incredible prosperity for the wealthy. Freedom, self-determination, democracy and human rights as the global norms.
Why are we throwing it away again? Much could be done to reform it, but we'll just throw it out?
Because we haven't figured out how to square allowing people the freedom to work in the industries they please, no matter where in the world that industry has found itself, with allowing countries to strictly limit who is allowed inside its borders.
The "just learn to code" message never sat well with those who have no interest in coding and now they are rising up to try and take back, so to speak, the work they actually want to do. The far reaching consequences that go along with that are not of their personal concern.
The other thing is that customers buying high end items care about where it was made, so you need to inform them. (Passing off the bikes as being manufactured in Japan but in fact the frame was made in China, would be a big blunder.)
It could be cheaper? Could also be more expensive as well.
In any case, if too many people play that game, then it only raises the tariff on Japan. I wouldn't assume these tariffs are fixed. They seem to be tied to trade deficit. So..
yeah.
No real way around them over time.
Might even piss the US government off if you try that. Which is kind of like playing with fire right now. It's not clear to me that this administration believes in rule of law in the strict sense that everyone adhered to in the past.
Strange days ahead.
I'm trying to figure out what the real story is.
When I read this I wonder if everything is a negotiating tactic:
"Trading partners have repeatedly blocked multilateral and plurilateral solutions, including in the context of new rounds of tariff negotiations and efforts to discipline non-tariff barriers."
https://www.whitehouse.gov/presidential-actions/2025/04/regu... (wow, long url)
I would like to think this is some kind of 4-d chess game to avoid rate hikes and to devalue the dollar, but on implementation it will accomplish none of the above with a sprinkle of recession.
Generally, many brands like e.g. Trek manufacture their highest end in Taiwan, but a lot of the mid- to high-level frames are still made in China, admittedly things might have changed since I last looked into this ~5 years ago.
I love to buy local, and I love to cycle, but what I can afford is $2K. Which is why I'm still riding the same Kestrel (full carbon w/ SRAM Force drivetrain) I got on Craigslist 8 years ago for $700, and on which I've since replaced a number of components, but have still spent < $2K overall. A comparable bike new these days would be at least $5K.
I was/am going to buy an Otso titanium frame, but they're made in Taiwan. Depending on the final price adjustment due to tariffs, it might actually be more cost effective for me to buy a Moots (made in America) frame to build.
The method of enshittification, as I understand it, is to create businesses with a moat that prevents competition, cheapen the product in every way possible, and squeeze as much rent out as possible. Also, extract as much as possible via debt.
The tariffs are the moat. The debt I don't need to explain (though Dems aren't great with it either).
It's all the opposite of competitive business and free markets.
They often seek to create calamity and crisis - with Covid; spreading fear (of immigrants, etc.), hatred and violence; disrupting health, education, and housing; international peace and security (NATO, Ukraine, etc.). You never see them spreading calm and peace - crisis seems necessary to their movement.
Tanking the economy does the same thing, but it is a much bigger step that impacts many of their supporters. What is their exit plan?
I expect part of their plan is to blame others: They will blame Democrats somehow, and other political enemies - it doesn't need any basis because the Dems don't have any effective means of refuting it to the public; whatever the GOP says becomes reality. I suspect they'll use it to ramp up hatred and fear, blaming their current objects of hatred such as immigrants, minorities, certain religions (a traditional object of blame, the right has already been normalizing antisemitism and general prejudice - which makes antisemitism inevitable. Rogan recently hosted a conspiracy theorist blaming Jewish people for 9/11, for example - how long before does he blames them for the economy, 'undermining President Trump'), liberals, etc.
Edit: I did some rewording
Making America "stand on its own two feet" would give it a lot of freedom in making choices that are at odds with future super powerful China that is no longer benevolent.
The idea that relationships reduce your independence is almost childish, like a 18 year old who things they tie you down and they'll go it alone in life. It's through relationships that people - and nations - have power. The US by itself can't afford to do much. Now the, again, vast network of US allies - including in that theater Japan, South Korea, the Philippines, Australia, to an extent India - share the burden.
> freedom in making choices that are at odds with future super powerful China that is no longer benevolent.
The US has disconnected itself from China for years now. China has little influence politically in the US.
What happened was China became extremely nationalistic, threatened and abused everyone, and the US moved in and allied with all its new enemies.
However, as the US becomes extremely nationalistic, threatening and abusing everyone, China is now moving in and building relationships. It's their own back yard, so it is hard to compete if you act like just another nationalistic dicatatorship.
In that context, a lot of it does not make sense. Why the threats about annexing Canada or Greenland? Why the tariffs and extremely hostile rhetoric towards all allies? If you are preparing for a war, the stupidest thing you could do is to alienate your allies and push them toward your adversary. China is already approaching the EU, and I am sure they are negotiating with other key players too. China even agreed on a joint response to the tariffs with Japan and South Korea. Let that sink in - China, together with Japan and South Korea!
Logically this may well push many to greater trade with China.
China has a growing middle consumer class already greater in number than the total population of the USofA. China already has global scale manufacturing in place, now looking for fresh markets as US markets lower demand due to tariffs.
Smaller countries, say Australia, can trade their wagyu beef to China now that the US has tariff'd the US demand down towards zero .. in a number of ways the US has removed itself from global trade which will continue on with or without it.
And yeah I think your read on how they'll manage the fallout of this is correct.
As for Trump himself, I think he truly believes the rest of the world is taking advantage of the US and tariffs are a way of setting things right. My guess is that in his view, the country (or at the least the rich people he cares about) will benefit from all this.