Generally speaking, imposing blanket tarrifs on imported goods without first investing significantly in domestic manufacturing is a really good way to make everything get really expensive...
Generally speaking, imposing blanket tarrifs on imported goods without first investing significantly in domestic manufacturing is a really good way to make everything get really expensive really fast. Nothing wrong with wanting a strong self sufficient and independent economy and strong domestic manufacturing, honestly it's better that way, but a tarrif like that is putting the wagon before the horse.
I'm one of those kooks who's a big fan of aggressive industrial policy to build up domestic industries, with the rapid growth and diversification of South...
I'm one of those kooks who's a big fan of aggressive industrial policy to build up domestic industries, with the rapid growth and diversification of South Korea's industry in the 20th century as the classic textbook example, but yikes! Industrial policy is supposed to be a holistic thing, with taxes AND investment, and ideally the investment part comes BEFORE the taxes. Even in the case of South Korea the success story, it was pretty rough for a while! Like, decades. Buying a Hyundai car or Samsung refrigerator in 2024 is pretty great. But only being able to buy those products as a Korean resident... in 1974? Not so great.
One of my favorite descriptions of the post-Covid economic situation is of "the weird economy." It's been great for some people, terrible for others, great on average, but with wide disparities in impacts when you look at any specific industrial segment like housing, cars, construction, services, obviously bikes and the outdoor recreation industry in general. I was hoping things would get progressively less weird, but with the tariff thing and, you know, other stuff, I think it's gonna keep being weird for a while. If I'm an economic forecaster at Trek, Giant, or Specialized HQ right now...
I don't know if I'd tell the boss the truth that nobody knows, or come in real confident with my forecast and sound like I know what I'm talking about. Guess it depends on how much I trust my boss.
I think we all know universal tariffs will be universally bad, but the really interesting aspect is how America's truly believe their economy is in bad...
I think we all know universal tariffs will be universally bad, but the really interesting aspect is how America's truly believe their economy is in bad shape, when in reality is the envy of the told and by far the most successful over the last few years.
If the tariffs come in hard and fast I definitely think it will push some companies over the edge, the bike companies are very precariously perched right now. Having to pay 10% extra on all Shimano/SRAM parts for OEM builds will be a massive burden, when we know the market will not tolerate price increases.
I don't think the companies have the capital to order now and stock up before the tariffs hit to mitigate the damage
What I am learning (and I know, anecdotes are not data) is that many/most Americans think that foreign companies will have to pay any tariffs and that the buck stops there; that that's how tariffs work, end of story 🥴
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be harder to sell elsewhere. Yay.
Then there are tariff exclusions or exemptions, which can be freely given to companies friendly to the administration. Smaller businesses or those without political connections may get stuck with the higher tariffs, which can hurt their ability to compete, even if they produce similar goods or services.
What I am learning (and I know, anecdotes are not data) is that many/most Americans think that foreign companies will have to pay any tariffs and...
What I am learning (and I know, anecdotes are not data) is that many/most Americans think that foreign companies will have to pay any tariffs and that the buck stops there; that that's how tariffs work, end of story 🥴
Yep.
A lot of A-to-B thinking without any regard for C, D, E, F, or any of the others all the way up to ZZ.
Not to take away from the conversation on tariffs, but seeing that photo of Zink's new frame in the tech rumors thread got me wondering... is the goal to just sell enough frames to offset the cost of making the frame that Zink wants to ride? Do Zink & co (I don't know who the '& co' are in this scenario, to be honest, but I assume he has some financial partners or backers involved) think they can sell enough frames/bikes to turn a significant profit? What is the expectation or plan here? It seems like they're trading on Zink's name/brand primarily, as the frame (no offense intended) doesn't feature anything new or noteworthy, technologically, and I'm curious what the expectations for the business are.
Also--Jeff Brines, if you're reading this, I really enjoyed the podcast but I'm a little disappointed you and Spomer didn't discuss the proliferation of third-party component brands, particularly bar/stem/pedal companies. Maybe it's just because I'm the type of person who puts a black alloy stem on every bike and never thinks twice about it, but my brain cannot fathom how many options there are on the market for those components--especially when so many of them are functionally indistinguishable. Are margins in that space exceptionally good or something?
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be...
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be harder to sell elsewhere. Yay.
Then there are tariff exclusions or exemptions, which can be freely given to companies friendly to the administration. Smaller businesses or those without political connections may get stuck with the higher tariffs, which can hurt their ability to compete, even if they produce similar goods or services.
Yes, that exact retaliatory effect is famously the source of the so-called "Chicken Tax" that we still impose on foreign light trucks imported into the USA, which was in retaliation for the European tariffs that were imposed on the inexpensive American chicken that was flooding European grocery stores in the boom time after WW2.
Yes, that exact retaliatory effect is famously the source of the so-called "Chicken Tax" that we still impose on foreign light trucks imported into the USA...
Yes, that exact retaliatory effect is famously the source of the so-called "Chicken Tax" that we still impose on foreign light trucks imported into the USA, which was in retaliation for the European tariffs that were imposed on the inexpensive American chicken that was flooding European grocery stores in the boom time after WW2.
Ahhh, the chicken tax on cool Toyota pickups, now you’re hitting us right in the feelers as MTB nerds.
Yeah well, I know I'm a couple days late on this one but like Deviate pointed out... When Trek is dumping all sizes of Gen 5...
Yeah well, I know I'm a couple days late on this one but like Deviate pointed out... When Trek is dumping all sizes of Gen 5 Trek Slash 9.8 (gx eagle, carbon wheels, solid suspension, etc) for $3800 CAD, down from like $8,500 (through retailers and with margin for retailers in that, mind), people, and by extension TPC are welcome to think that their used bike is somehow worth more than that.
You'd have to think the TPC guys are getting a cash infusion that will hold off on operating at whatever their capacity is until market stabilization, whenever that might be.
I personally hope Deviate can hang on. Someone's gotta honour my lifetime warranty!
I heard from someone at Trek Australia that at their peak they had between 75,000 and 100,000 bikes sitting in their warehouses thanks to the oversupply.
wtf, they thought 1 in 250 people in the whole of Australia was going to buy a trek mtb lol. Delusional.
Well I’d imagine it’s not quite that simple. With Australia’s proximity to Taiwan I wouldn’t be suprised if many of those bikes are meant to be destined for other markets. Just simply those other markets have not needed containers of bikes shipped to them.
Well I’d imagine it’s not quite that simple. With Australia’s proximity to Taiwan I wouldn’t be suprised if many of those bikes are meant to be...
Well I’d imagine it’s not quite that simple. With Australia’s proximity to Taiwan I wouldn’t be suprised if many of those bikes are meant to be destined for other markets. Just simply those other markets have not needed containers of bikes shipped to them.
Don't think any bean counters at Trek HQ would have accepted to have container leave the assembly plant in Taiwan to get packed into container (labor and pallet fee), get sent to Kaoshiung port (transport fee), get on a boat and shipped to australia (maritime shipping fee), get cleared for customs (transport company custom handling fee and governement duty fee) just to sit in a warehouse unsold. waiting for another market to need them, repeat that shipping process and in the end up paying almost twice the shipping cost with current container cost fluctuating between 5000 to 10 000 USD door to door.
Could be possible that Trek Australia was also holding inventory for NZ but very slim chance those bikes get sent to Europe or NA.
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be...
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be harder to sell elsewhere. Yay.
Then there are tariff exclusions or exemptions, which can be freely given to companies friendly to the administration. Smaller businesses or those without political connections may get stuck with the higher tariffs, which can hurt their ability to compete, even if they produce similar goods or services.
This shit is ridiculous rofl
Anyone who's read or even skimmed The Wealth of Nations understands that limiting free trade is deleterious for both sides.
Personally I stocked myself to the gills with riding gear and parts to weather this shitstorm if it happens.
Well I’d imagine it’s not quite that simple. With Australia’s proximity to Taiwan I wouldn’t be suprised if many of those bikes are meant to be...
Well I’d imagine it’s not quite that simple. With Australia’s proximity to Taiwan I wouldn’t be suprised if many of those bikes are meant to be destined for other markets. Just simply those other markets have not needed containers of bikes shipped to them.
Don't think any bean counters at Trek HQ would have accepted to have container leave the assembly plant in Taiwan to get packed into container (labor...
Don't think any bean counters at Trek HQ would have accepted to have container leave the assembly plant in Taiwan to get packed into container (labor and pallet fee), get sent to Kaoshiung port (transport fee), get on a boat and shipped to australia (maritime shipping fee), get cleared for customs (transport company custom handling fee and governement duty fee) just to sit in a warehouse unsold. waiting for another market to need them, repeat that shipping process and in the end up paying almost twice the shipping cost with current container cost fluctuating between 5000 to 10 000 USD door to door.
Could be possible that Trek Australia was also holding inventory for NZ but very slim chance those bikes get sent to Europe or NA.
Unless there is something in Australia that they think might move better here.. I've seen Australia spec bikes show up here. The difference being the wheel reflectors and a bell. Years back I remember seeing some bike from Specialized that were originally intended for Australia.. Probably not the preferred way to do it, but in a pinch..
Not to take away from the conversation on tariffs, but seeing that photo of Zink's new frame in the tech rumors thread got me wondering... is...
Not to take away from the conversation on tariffs, but seeing that photo of Zink's new frame in the tech rumors thread got me wondering... is the goal to just sell enough frames to offset the cost of making the frame that Zink wants to ride? Do Zink & co (I don't know who the '& co' are in this scenario, to be honest, but I assume he has some financial partners or backers involved) think they can sell enough frames/bikes to turn a significant profit? What is the expectation or plan here? It seems like they're trading on Zink's name/brand primarily, as the frame (no offense intended) doesn't feature anything new or noteworthy, technologically, and I'm curious what the expectations for the business are.
Also--Jeff Brines, if you're reading this, I really enjoyed the podcast but I'm a little disappointed you and Spomer didn't discuss the proliferation of third-party component brands, particularly bar/stem/pedal companies. Maybe it's just because I'm the type of person who puts a black alloy stem on every bike and never thinks twice about it, but my brain cannot fathom how many options there are on the market for those components--especially when so many of them are functionally indistinguishable. Are margins in that space exceptionally good or something?
Thank you for the listen, and you're absolutely right—we should have addressed this point.
The proliferation of these companies in the mountain bike industry largely stems from how accessible this type of business is. These brands are essentially the "T-shirt companies" of the industry: they’re easy to start, require minimal capital, and are more akin to soft goods than advanced technical products. The primary focus for many of these businesses is building a strong brand rather than developing groundbreaking functionality—though functionality obviously still matters.
It’s important to distinguish between companies that rely on mass-produced, private-label products from overseas (often found via platforms like Alibaba) and those that have their own manufacturing capabilities, such as CNCs or production facilities in North America or Europe. The latter is not what I'm referring to in this post, and a completely different type business more akin to LVMH than {name your tee shirt brand here}. As to the former, those curious, a quick browse on Alibaba reveals how straightforward it can be to customize, brand, and import products at a low cost.
Because of this accessibility, it’s easy to imagine how someone could be drawn into the business model: have components manufactured, bagged or boxed, SKU’d, and prepared for sale entirely in Asia. The products are then shipped to an e-commerce fulfillment center integrated with your website, where they’re sold directly to consumers. From there, it’s a matter of running ads, sponsoring athletes, and building awareness. In theory, this could function as a nearly automated business—orders trigger new manufacturing runs, and the cycle repeats.
However, the reality is much more challenging. Moving products, even metaphorical “T-shirts,” is incredibly difficult. Building brand equity is a monumental task, especially if the products themselves lack differentiation or memorability. That said, we will likely see more of these companies emerge, often with a niche twist—like titanium handlebars with extra flex, carbon bars designed for vibration damping, and stems to compliment your swank. (to be fair, what I just described is way more LVMH than it is generic tee shirt brand)
The truth is, few companies truly break through. Deity is one of the only examples (I can think of) of a brand that has successfully navigated this space utilizing overseas manufacturing and achieved lasting success. Most others, outside the OEMs, unfortunately, fade into obscurity.
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be...
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be harder to sell elsewhere. Yay.
Then there are tariff exclusions or exemptions, which can be freely given to companies friendly to the administration. Smaller businesses or those without political connections may get stuck with the higher tariffs, which can hurt their ability to compete, even if they produce similar goods or services.
Just to comment on the potential for tariffs (leaving all the other political stuff at the door) - its largely bad for those of us in the United States who ride bikes. In fact, considering how many bike brands are based here, its bad for everyone. I wish I could point to some redeeming factor, but I honestly can't think of one. Bikes are incredibly global, and the idea that we'll just onshore everything to reward American labor, ingenuity and manufacturing is not based in any kind of 2024 reality for reasons I'll leave aside for now.
My hope is any tariffs that are imposed do not impact the bike industry (actually, my hope is we don't utilize tariffs at all). Time will tell.
Just to comment on the potential for tariffs (leaving all the other political stuff at the door) - its largely bad for those of us in...
Just to comment on the potential for tariffs (leaving all the other political stuff at the door) - its largely bad for those of us in the United States who ride bikes. In fact, considering how many bike brands are based here, its bad for everyone. I wish I could point to some redeeming factor, but I honestly can't think of one. Bikes are incredibly global, and the idea that we'll just onshore everything to reward American labor, ingenuity and manufacturing is not based in any kind of 2024 reality for reasons I'll leave aside for now.
My hope is any tariffs that are imposed do not impact the bike industry (actually, my hope is we don't utilize tariffs at all). Time will tell.
We're not talking politics were talking economics haha. I don't think any policy makers, regardless of political affiliation, consider the impact on specific industries when discussing tarrifs like this. They seem to be only thinking of GDP, which sucks for individual people and niche industries.
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be...
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be harder to sell elsewhere. Yay.
Then there are tariff exclusions or exemptions, which can be freely given to companies friendly to the administration. Smaller businesses or those without political connections may get stuck with the higher tariffs, which can hurt their ability to compete, even if they produce similar goods or services.
Just to comment on the potential for tariffs (leaving all the other political stuff at the door) - its largely bad for those of us in...
Just to comment on the potential for tariffs (leaving all the other political stuff at the door) - its largely bad for those of us in the United States who ride bikes. In fact, considering how many bike brands are based here, its bad for everyone. I wish I could point to some redeeming factor, but I honestly can't think of one. Bikes are incredibly global, and the idea that we'll just onshore everything to reward American labor, ingenuity and manufacturing is not based in any kind of 2024 reality for reasons I'll leave aside for now.
My hope is any tariffs that are imposed do not impact the bike industry (actually, my hope is we don't utilize tariffs at all). Time will tell.
Jeff, how liquid should I be for the impending trade war?
I'd also be curious to get folks thoughts on if they'd be more willing to buy bike components that were made domestically. I am not, by any stretch of the imagination, advocating for tariffs. More just curious on if seeing "USA" or "EU" made on particular bike components might sway the needle in terms of which parts/bikes to purchase.
As far as my thoughts on the whole thing. I do feel like the last thing the bike market needs right now is another gut uch to anyone's bottom line, and I think the pain would extend beyond just manufacturers. Biking is fun, but will people still want/have the funds to bike if it costs 10-20% more to do?
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be...
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be harder to sell elsewhere. Yay.
Then there are tariff exclusions or exemptions, which can be freely given to companies friendly to the administration. Smaller businesses or those without political connections may get stuck with the higher tariffs, which can hurt their ability to compete, even if they produce similar goods or services.
Just to comment on the potential for tariffs (leaving all the other political stuff at the door) - its largely bad for those of us in...
Just to comment on the potential for tariffs (leaving all the other political stuff at the door) - its largely bad for those of us in the United States who ride bikes. In fact, considering how many bike brands are based here, its bad for everyone. I wish I could point to some redeeming factor, but I honestly can't think of one. Bikes are incredibly global, and the idea that we'll just onshore everything to reward American labor, ingenuity and manufacturing is not based in any kind of 2024 reality for reasons I'll leave aside for now.
My hope is any tariffs that are imposed do not impact the bike industry (actually, my hope is we don't utilize tariffs at all). Time will tell.
Jeff, how liquid should I be for the impending trade war?I'd also be curious to get folks thoughts on if they'd be more willing to buy...
Jeff, how liquid should I be for the impending trade war?
I'd also be curious to get folks thoughts on if they'd be more willing to buy bike components that were made domestically. I am not, by any stretch of the imagination, advocating for tariffs. More just curious on if seeing "USA" or "EU" made on particular bike components might sway the needle in terms of which parts/bikes to purchase.
As far as my thoughts on the whole thing. I do feel like the last thing the bike market needs right now is another gut uch to anyone's bottom line, and I think the pain would extend beyond just manufacturers. Biking is fun, but will people still want/have the funds to bike if it costs 10-20% more to do?
Well you ideally wouldn't want to be liquid, you would want to have large amounts on inventory purchased pre tariffs to hedge against the price rises. You don't need liquidity post tariff as everything is now expensive and you won't want to buy it.
I think we've know for a while people like buying higher quality made in USA/EU etc components and bikes. The reality is though is that these are small companies making very small amounts of frames.
USA and the EU will never replace the mass manufactured frames from Asia, nor should they. These aren't nice jobs. Nobody wants to work in a factory for low wages doing carbon layup. Theres a reason most EU carbon is in Romania and the Eastern EU states, and only super high end carbon is in France/Germany/Italy.
We traded shitty hard manufacturing jobs for cushy air-conditioned service jobs. There's no point complaining about it now.
Well I’d imagine it’s not quite that simple. With Australia’s proximity to Taiwan I wouldn’t be suprised if many of those bikes are meant to be...
Well I’d imagine it’s not quite that simple. With Australia’s proximity to Taiwan I wouldn’t be suprised if many of those bikes are meant to be destined for other markets. Just simply those other markets have not needed containers of bikes shipped to them.
Don't think any bean counters at Trek HQ would have accepted to have container leave the assembly plant in Taiwan to get packed into container (labor...
Don't think any bean counters at Trek HQ would have accepted to have container leave the assembly plant in Taiwan to get packed into container (labor and pallet fee), get sent to Kaoshiung port (transport fee), get on a boat and shipped to australia (maritime shipping fee), get cleared for customs (transport company custom handling fee and governement duty fee) just to sit in a warehouse unsold. waiting for another market to need them, repeat that shipping process and in the end up paying almost twice the shipping cost with current container cost fluctuating between 5000 to 10 000 USD door to door.
Could be possible that Trek Australia was also holding inventory for NZ but very slim chance those bikes get sent to Europe or NA.
Unless there is something in Australia that they think might move better here.. I've seen Australia spec bikes show up here. The difference being the wheel...
Unless there is something in Australia that they think might move better here.. I've seen Australia spec bikes show up here. The difference being the wheel reflectors and a bell. Years back I remember seeing some bike from Specialized that were originally intended for Australia.. Probably not the preferred way to do it, but in a pinch..
our cranks are backwards, like how the toilet water spins backwards.
Well you ideally wouldn't want to be liquid, you would want to have large amounts on inventory purchased pre tariffs to hedge against the price rises...
Well you ideally wouldn't want to be liquid, you would want to have large amounts on inventory purchased pre tariffs to hedge against the price rises. You don't need liquidity post tariff as everything is now expensive and you won't want to buy it.
I think we've know for a while people like buying higher quality made in USA/EU etc components and bikes. The reality is though is that these are small companies making very small amounts of frames.
USA and the EU will never replace the mass manufactured frames from Asia, nor should they. These aren't nice jobs. Nobody wants to work in a factory for low wages doing carbon layup. Theres a reason most EU carbon is in Romania and the Eastern EU states, and only super high end carbon is in France/Germany/Italy.
We traded shitty hard manufacturing jobs for cushy air-conditioned service jobs. There's no point complaining about it now.
I'm not an economics/financial/business guy. In fact, I'd say I'm bad at business though I run my own creative-focused business.
BUT I was starting to type up a post that much less eloquently hit on many of your points:
Ideally a company would already have everything because it'll be more expensive to purchase later (for example, I literally acceleratedly-for-my-comfort-levels purchased a bike recently days before the election to avoid the impending tariff-fueled price spikes). You're not going to want to buy it post-tariffs because it's going to be more expensive so do what you can to get ahead of it if possible. Storage might be cheaper than the ability to buy at a higher price later.
The quest for bigger profit margin and higher top-of-the-food-chain salaries has shipped all of our skills, facilities, workers, and supply chains to other places in the world. We won't get those back any time soon...and not without HUGE investment and an uncomfortable amount of time passing to make it happen.
...then I saw that person was asking for Jeff's opinion and NOT mine (a bad-at-business business owner offering creative services).
So I shortened my long-ass, whimsically-worded post that was based only on a lot of thoughts and ideas I've had about these sorts of topics for a long time to what I typed up above. It's interesting to see that my no-training-but-lots-of-time-spent-thinking thoughts came to similar conclusions as your much-more-knowledge-and-training-and-real world experience-than-I-could-ever-have professional opinion. I very specifically don't mean to devalue your opinion or your skills/training/experience (some of the stuff you said in the podcast made my brain lights go dim), I say this all to pat myself on the back to remind me that I'm not so dumb and I'm not so out-of-touch with the thoughts of the capital "f" Financial world.
Thanks for providing a look into the financial world a lot of us would have never had otherwise (because what VC person is going to want to have a discussion about their billion-dollar-thought-process with a music guy who feels bad charging his clients his full rate because my very unique and honed skills don't guarantee commercial success rather they give an artist an opportunity for commercial success if they follow through after our work is completed - essentially I manufacture the content of the record and the artist still has to market it)!
On the stems topic: Back in 2010s I worked for German bike brands, high quality, highly engineered, and all built in Tawain. The factory that built said high quality stems/bars/parts asked us to potentially sell a white label stem in the US. This would have been made right next to said German company parts(aka quality was there) and was designed between US and Tawain engineers. If i remember correctly, cost to build was in the $30s USD and then shipped and landed was around $50 USD. The plan was to sell for $90+. The manufacturer was all hot and heavy to make this happen, but didn't understand the costs to get market share in the US and the stems never made it to mass production. They had no brand and no market awareness aka no business.
If you already have the brand, think Title or Trail One; getting the parts sorted isn't that tough. Now can you sell through? Stocking and warehousing? Marketing costs to keep the brand in front of the right people?
I think we have seen it with frames a few times now, especially in the DJ/Freeride world, where cool dude makes brand, and then the brand is gone in 3-4 years. This is very much like T-shirts, and while cool, has shown to not have staying power in this industry.
On the stems topic:Back in 2010s I worked for German bike brands, high quality, highly engineered, and all built in Tawain. The factory that built said...
On the stems topic: Back in 2010s I worked for German bike brands, high quality, highly engineered, and all built in Tawain. The factory that built said high quality stems/bars/parts asked us to potentially sell a white label stem in the US. This would have been made right next to said German company parts(aka quality was there) and was designed between US and Tawain engineers. If i remember correctly, cost to build was in the $30s USD and then shipped and landed was around $50 USD. The plan was to sell for $90+. The manufacturer was all hot and heavy to make this happen, but didn't understand the costs to get market share in the US and the stems never made it to mass production. They had no brand and no market awareness aka no business.
If you already have the brand, think Title or Trail One; getting the parts sorted isn't that tough. Now can you sell through? Stocking and warehousing? Marketing costs to keep the brand in front of the right people?
I think we have seen it with frames a few times now, especially in the DJ/Freeride world, where cool dude makes brand, and then the brand is gone in 3-4 years. This is very much like T-shirts, and while cool, has shown to not have staying power in this industry.
Had a pal print out a stem I modelled and when we were talking about it he was point blank about how the industry doesn't need another $100+ stem. That stung, but I couldn't fault his reasoning. A stem is a simple junction, it has to hold the bars, the steerer, and not break. You can add features, but that ends up being window dressing for the most part.
History: Trump did implement tariffs aimed at specific industries and countries during his last administration. In fact, they specifically targeted bicycle and bicycle accessories from China, in addition to steel, aluminum and other Chinese based goods. I can't find an exact amount (I didn't try that hard) but it appears to have impacted our industry 10-25%. I honestly don't remember any part of my bicycle going up in price. More on this in a second.
New Plan: One of the biggest challenges to Trump as a president is distilling what he says from what he does. From what I understand, he's considering a widespread tariff on all imported goods of 10-20% and a tariff of 60% or more on goods specifically from China. I know a number of Trumpers who would suggest I need to somehow abstract policy in a lesser literal way than what he's saying, but I have no idea how I'd even begin to do that. So, for the purpose of this post, I'm going to take what he says at surface value. I do think its worth noting, there is a good chance he alters course here and backs off what he's suggesting now to something less aggressive (we can only hope). Regardless, two points to make here.
One - If he does implement an all encompassing tariff of 10-20% we can expect our bicycle related purchases to go up 1:1 correlated amount, unless the part is fully made in the united states. One of the biggest fallacies consumers make is assuming a company will absorb cost increases, they almost never do. The only case where you'll see margin compression is more due to an over supply, weakening demand, some outliar one time expense and/or increase in competition. We may have those factors in play, too, which will complicate this, but the impact will still be noteworthy.
Two - How much of our stuff is actually made in China these days? I know a lot comes from Taiwan, Vietnam, etc but I'm honestly not sure how much is actually coming from China, specifically. This is really the big question, and those are the goods that'll really feel notably more expensive.
Regardless, this is going to create some real turbulence in an already wounded industry. If I were in management at any of the big bike or component companies, I'd be doing some real head scratching as to how to best navigate this.
EDIT: On that note (how to navigate), it might seem to make sense to move quickly and add a bunch of product to your US warehouse before the tariffs hit but if I were in the driver's seat, I probably wouldn't be doing this. Capital isn't free, nor infinite and longer I tie capital up for the lower my return is on the sale of the product. Put simply, doing this would be to put my proverbial company in the situation its (possibly) already in - excess inventory in a warehouse somewhere that I can't move. I'd probably be looking to tighten up my product offerings, get real specific around what people really want and optimize on the SG&A side to keep my costs around where they are right now. There are other things...but I'll leave it here for my one paragraph answer
Not sure it is being discussed here, but word from many sources is that the next gen Levo has been ready for ages and they just...
Not sure it is being discussed here, but word from many sources is that the next gen Levo has been ready for ages and they just keep pushing back the announcement due to the amount of unsold current gen stock.
I wonder how many other new models have been delayed? I expected to see this.. Or, the new product gets released, but the product is still...
I wonder how many other new models have been delayed? I expected to see this.. Or, the new product gets released, but the product is still months out..I recall seeing that a few times already..
There have been some INSANE sales at the local Specialized dealer here in WNC. My understanding is when the shops got bought by a private owner back from Specialized corporate ownership, the warehouses were chock full of bikes and they just need to move them.
There have been some INSANE sales at the local Specialized dealer here in WNC. My understanding is when the shops got bought by a private owner...
There have been some INSANE sales at the local Specialized dealer here in WNC. My understanding is when the shops got bought by a private owner back from Specialized corporate ownership, the warehouses were chock full of bikes and they just need to move them.
There are reports that there were (Still may be? ) a lot of bikes sitting in Taiwan waiting to come over.. One advantage to the company stores, they can frontload the shops with inventory that a regular LBS might pass on..
There have been some INSANE sales at the local Specialized dealer here in WNC. My understanding is when the shops got bought by a private owner...
There have been some INSANE sales at the local Specialized dealer here in WNC. My understanding is when the shops got bought by a private owner back from Specialized corporate ownership, the warehouses were chock full of bikes and they just need to move them.
There are reports that there were (Still may be? ) a lot of bikes sitting in Taiwan waiting to come over.. One advantage to the company...
There are reports that there were (Still may be? ) a lot of bikes sitting in Taiwan waiting to come over.. One advantage to the company stores, they can frontload the shops with inventory that a regular LBS might pass on..
We're talking Stumpy 15's full Ohlins for 35% off. Brand new stuff that they just need to move asap. It was kind of bizarre to see.
There have been some INSANE sales at the local Specialized dealer here in WNC. My understanding is when the shops got bought by a private owner...
There have been some INSANE sales at the local Specialized dealer here in WNC. My understanding is when the shops got bought by a private owner back from Specialized corporate ownership, the warehouses were chock full of bikes and they just need to move them.
There are reports that there were (Still may be? ) a lot of bikes sitting in Taiwan waiting to come over.. One advantage to the company...
There are reports that there were (Still may be? ) a lot of bikes sitting in Taiwan waiting to come over.. One advantage to the company stores, they can frontload the shops with inventory that a regular LBS might pass on..
Tariff Follow UpHistory: Trump did implement tariffs aimed at specific industries and countries during his last administration. In fact, they specifically targeted bicycle and bicycle...
Tariff Follow Up
History: Trump did implement tariffs aimed at specific industries and countries during his last administration. In fact, they specifically targeted bicycle and bicycle accessories from China, in addition to steel, aluminum and other Chinese based goods. I can't find an exact amount (I didn't try that hard) but it appears to have impacted our industry 10-25%. I honestly don't remember any part of my bicycle going up in price. More on this in a second.
New Plan: One of the biggest challenges to Trump as a president is distilling what he says from what he does. From what I understand, he's considering a widespread tariff on all imported goods of 10-20% and a tariff of 60% or more on goods specifically from China. I know a number of Trumpers who would suggest I need to somehow abstract policy in a lesser literal way than what he's saying, but I have no idea how I'd even begin to do that. So, for the purpose of this post, I'm going to take what he says at surface value. I do think its worth noting, there is a good chance he alters course here and backs off what he's suggesting now to something less aggressive (we can only hope). Regardless, two points to make here.
One - If he does implement an all encompassing tariff of 10-20% we can expect our bicycle related purchases to go up 1:1 correlated amount, unless the part is fully made in the united states. One of the biggest fallacies consumers make is assuming a company will absorb cost increases, they almost never do. The only case where you'll see margin compression is more due to an over supply, weakening demand, some outliar one time expense and/or increase in competition. We may have those factors in play, too, which will complicate this, but the impact will still be noteworthy.
Two - How much of our stuff is actually made in China these days? I know a lot comes from Taiwan, Vietnam, etc but I'm honestly not sure how much is actually coming from China, specifically. This is really the big question, and those are the goods that'll really feel notably more expensive.
Regardless, this is going to create some real turbulence in an already wounded industry. If I were in management at any of the big bike or component companies, I'd be doing some real head scratching as to how to best navigate this.
EDIT: On that note (how to navigate), it might seem to make sense to move quickly and add a bunch of product to your US warehouse before the tariffs hit but if I were in the driver's seat, I probably wouldn't be doing this. Capital isn't free, nor infinite and longer I tie capital up for the lower my return is on the sale of the product. Put simply, doing this would be to put my proverbial company in the situation its (possibly) already in - excess inventory in a warehouse somewhere that I can't move. I'd probably be looking to tighten up my product offerings, get real specific around what people really want and optimize on the SG&A side to keep my costs around where they are right now. There are other things...but I'll leave it here for my one paragraph answer
Here is a timeline of tariff Trump did during his first term:
Most major brands have a Canadian warehouse/branch but not all of them get stuff shipped directly from Asia to Canada and instead go through the USA before getting to us so we will likely be impacted indirectly by Trump Tariffs.
Santa Cruz (bikes for the canadian market are assembled in SC,CA) and Shimano (everything goes through Irvine first) are two that I know could be affected.
What I am learning (and I know, anecdotes are not data) is that many/most Americans think that foreign companies will have to pay any tariffs and that the buck stops there; that that's how tariffs work, end of story 🥴
It should also be mentioned that there will be retaliatory tariffs imposed by other countries. So, your reward for already making products here? Now, they'll be harder to sell elsewhere. Yay.
Then there are tariff exclusions or exemptions, which can be freely given to companies friendly to the administration. Smaller businesses or those without political connections may get stuck with the higher tariffs, which can hurt their ability to compete, even if they produce similar goods or services.
Yep.
A lot of A-to-B thinking without any regard for C, D, E, F, or any of the others all the way up to ZZ.
Not to take away from the conversation on tariffs, but seeing that photo of Zink's new frame in the tech rumors thread got me wondering... is the goal to just sell enough frames to offset the cost of making the frame that Zink wants to ride? Do Zink & co (I don't know who the '& co' are in this scenario, to be honest, but I assume he has some financial partners or backers involved) think they can sell enough frames/bikes to turn a significant profit? What is the expectation or plan here? It seems like they're trading on Zink's name/brand primarily, as the frame (no offense intended) doesn't feature anything new or noteworthy, technologically, and I'm curious what the expectations for the business are.
Also--Jeff Brines, if you're reading this, I really enjoyed the podcast but I'm a little disappointed you and Spomer didn't discuss the proliferation of third-party component brands, particularly bar/stem/pedal companies. Maybe it's just because I'm the type of person who puts a black alloy stem on every bike and never thinks twice about it, but my brain cannot fathom how many options there are on the market for those components--especially when so many of them are functionally indistinguishable. Are margins in that space exceptionally good or something?
Yes, that exact retaliatory effect is famously the source of the so-called "Chicken Tax" that we still impose on foreign light trucks imported into the USA, which was in retaliation for the European tariffs that were imposed on the inexpensive American chicken that was flooding European grocery stores in the boom time after WW2.
Ahhh, the chicken tax on cool Toyota pickups, now you’re hitting us right in the feelers as MTB nerds.
Well I’d imagine it’s not quite that simple. With Australia’s proximity to Taiwan I wouldn’t be suprised if many of those bikes are meant to be destined for other markets. Just simply those other markets have not needed containers of bikes shipped to them.
Don't think any bean counters at Trek HQ would have accepted to have container leave the assembly plant in Taiwan to get packed into container (labor and pallet fee), get sent to Kaoshiung port (transport fee), get on a boat and shipped to australia (maritime shipping fee), get cleared for customs (transport company custom handling fee and governement duty fee) just to sit in a warehouse unsold. waiting for another market to need them, repeat that shipping process and in the end up paying almost twice the shipping cost with current container cost fluctuating between 5000 to 10 000 USD door to door.
Could be possible that Trek Australia was also holding inventory for NZ but very slim chance those bikes get sent to Europe or NA.
This shit is ridiculous rofl
Anyone who's read or even skimmed The Wealth of Nations understands that limiting free trade is deleterious for both sides.
Personally I stocked myself to the gills with riding gear and parts to weather this shitstorm if it happens.
Unless there is something in Australia that they think might move better here.. I've seen Australia spec bikes show up here. The difference being the wheel reflectors and a bell. Years back I remember seeing some bike from Specialized that were originally intended for Australia.. Probably not the preferred way to do it, but in a pinch..
Thank you for the listen, and you're absolutely right—we should have addressed this point.
The proliferation of these companies in the mountain bike industry largely stems from how accessible this type of business is. These brands are essentially the "T-shirt companies" of the industry: they’re easy to start, require minimal capital, and are more akin to soft goods than advanced technical products. The primary focus for many of these businesses is building a strong brand rather than developing groundbreaking functionality—though functionality obviously still matters.
It’s important to distinguish between companies that rely on mass-produced, private-label products from overseas (often found via platforms like Alibaba) and those that have their own manufacturing capabilities, such as CNCs or production facilities in North America or Europe. The latter is not what I'm referring to in this post, and a completely different type business more akin to LVMH than {name your tee shirt brand here}. As to the former, those curious, a quick browse on Alibaba reveals how straightforward it can be to customize, brand, and import products at a low cost.
Because of this accessibility, it’s easy to imagine how someone could be drawn into the business model: have components manufactured, bagged or boxed, SKU’d, and prepared for sale entirely in Asia. The products are then shipped to an e-commerce fulfillment center integrated with your website, where they’re sold directly to consumers. From there, it’s a matter of running ads, sponsoring athletes, and building awareness. In theory, this could function as a nearly automated business—orders trigger new manufacturing runs, and the cycle repeats.
However, the reality is much more challenging. Moving products, even metaphorical “T-shirts,” is incredibly difficult. Building brand equity is a monumental task, especially if the products themselves lack differentiation or memorability. That said, we will likely see more of these companies emerge, often with a niche twist—like titanium handlebars with extra flex, carbon bars designed for vibration damping, and stems to compliment your swank. (to be fair, what I just described is way more LVMH than it is generic tee shirt brand)
The truth is, few companies truly break through. Deity is one of the only examples (I can think of) of a brand that has successfully navigated this space utilizing overseas manufacturing and achieved lasting success. Most others, outside the OEMs, unfortunately, fade into obscurity.
Just to comment on the potential for tariffs (leaving all the other political stuff at the door) - its largely bad for those of us in the United States who ride bikes. In fact, considering how many bike brands are based here, its bad for everyone. I wish I could point to some redeeming factor, but I honestly can't think of one. Bikes are incredibly global, and the idea that we'll just onshore everything to reward American labor, ingenuity and manufacturing is not based in any kind of 2024 reality for reasons I'll leave aside for now.
My hope is any tariffs that are imposed do not impact the bike industry (actually, my hope is we don't utilize tariffs at all). Time will tell.
We're not talking politics were talking economics haha. I don't think any policy makers, regardless of political affiliation, consider the impact on specific industries when discussing tarrifs like this. They seem to be only thinking of GDP, which sucks for individual people and niche industries.
Jeff, how liquid should I be for the impending trade war?
I'd also be curious to get folks thoughts on if they'd be more willing to buy bike components that were made domestically. I am not, by any stretch of the imagination, advocating for tariffs. More just curious on if seeing "USA" or "EU" made on particular bike components might sway the needle in terms of which parts/bikes to purchase.
As far as my thoughts on the whole thing. I do feel like the last thing the bike market needs right now is another gut uch to anyone's bottom line, and I think the pain would extend beyond just manufacturers. Biking is fun, but will people still want/have the funds to bike if it costs 10-20% more to do?
Well you ideally wouldn't want to be liquid, you would want to have large amounts on inventory purchased pre tariffs to hedge against the price rises. You don't need liquidity post tariff as everything is now expensive and you won't want to buy it.
I think we've know for a while people like buying higher quality made in USA/EU etc components and bikes. The reality is though is that these are small companies making very small amounts of frames.
USA and the EU will never replace the mass manufactured frames from Asia, nor should they. These aren't nice jobs. Nobody wants to work in a factory for low wages doing carbon layup. Theres a reason most EU carbon is in Romania and the Eastern EU states, and only super high end carbon is in France/Germany/Italy.
We traded shitty hard manufacturing jobs for cushy air-conditioned service jobs. There's no point complaining about it now.
our cranks are backwards, like how the toilet water spins backwards.
Brakes on the correct side too.
I'm not an economics/financial/business guy. In fact, I'd say I'm bad at business though I run my own creative-focused business.
BUT I was starting to type up a post that much less eloquently hit on many of your points:
Ideally a company would already have everything because it'll be more expensive to purchase later (for example, I literally acceleratedly-for-my-comfort-levels purchased a bike recently days before the election to avoid the impending tariff-fueled price spikes). You're not going to want to buy it post-tariffs because it's going to be more expensive so do what you can to get ahead of it if possible. Storage might be cheaper than the ability to buy at a higher price later.
The quest for bigger profit margin and higher top-of-the-food-chain salaries has shipped all of our skills, facilities, workers, and supply chains to other places in the world. We won't get those back any time soon...and not without HUGE investment and an uncomfortable amount of time passing to make it happen.
...then I saw that person was asking for Jeff's opinion and NOT mine (a bad-at-business business owner offering creative services).
So I shortened my long-ass, whimsically-worded post that was based only on a lot of thoughts and ideas I've had about these sorts of topics for a long time to what I typed up above. It's interesting to see that my no-training-but-lots-of-time-spent-thinking thoughts came to similar conclusions as your much-more-knowledge-and-training-and-real world experience-than-I-could-ever-have professional opinion. I very specifically don't mean to devalue your opinion or your skills/training/experience (some of the stuff you said in the podcast made my brain lights go dim), I say this all to pat myself on the back to remind me that I'm not so dumb and I'm not so out-of-touch with the thoughts of the capital "f" Financial world.
Thanks for providing a look into the financial world a lot of us would have never had otherwise (because what VC person is going to want to have a discussion about their billion-dollar-thought-process with a music guy who feels bad charging his clients his full rate because my very unique and honed skills don't guarantee commercial success rather they give an artist an opportunity for commercial success if they follow through after our work is completed - essentially I manufacture the content of the record and the artist still has to market it)!
LMAO!
On the stems topic:
Back in 2010s I worked for German bike brands, high quality, highly engineered, and all built in Tawain. The factory that built said high quality stems/bars/parts asked us to potentially sell a white label stem in the US. This would have been made right next to said German company parts(aka quality was there) and was designed between US and Tawain engineers. If i remember correctly, cost to build was in the $30s USD and then shipped and landed was around $50 USD. The plan was to sell for $90+. The manufacturer was all hot and heavy to make this happen, but didn't understand the costs to get market share in the US and the stems never made it to mass production. They had no brand and no market awareness aka no business.
If you already have the brand, think Title or Trail One; getting the parts sorted isn't that tough. Now can you sell through? Stocking and warehousing? Marketing costs to keep the brand in front of the right people?
I think we have seen it with frames a few times now, especially in the DJ/Freeride world, where cool dude makes brand, and then the brand is gone in 3-4 years. This is very much like T-shirts, and while cool, has shown to not have staying power in this industry.
Had a pal print out a stem I modelled and when we were talking about it he was point blank about how the industry doesn't need another $100+ stem. That stung, but I couldn't fault his reasoning. A stem is a simple junction, it has to hold the bars, the steerer, and not break. You can add features, but that ends up being window dressing for the most part.
Tariff Follow Up
History: Trump did implement tariffs aimed at specific industries and countries during his last administration. In fact, they specifically targeted bicycle and bicycle accessories from China, in addition to steel, aluminum and other Chinese based goods. I can't find an exact amount (I didn't try that hard) but it appears to have impacted our industry 10-25%. I honestly don't remember any part of my bicycle going up in price. More on this in a second.
New Plan: One of the biggest challenges to Trump as a president is distilling what he says from what he does. From what I understand, he's considering a widespread tariff on all imported goods of 10-20% and a tariff of 60% or more on goods specifically from China. I know a number of Trumpers who would suggest I need to somehow abstract policy in a lesser literal way than what he's saying, but I have no idea how I'd even begin to do that. So, for the purpose of this post, I'm going to take what he says at surface value. I do think its worth noting, there is a good chance he alters course here and backs off what he's suggesting now to something less aggressive (we can only hope). Regardless, two points to make here.
One - If he does implement an all encompassing tariff of 10-20% we can expect our bicycle related purchases to go up 1:1 correlated amount, unless the part is fully made in the united states. One of the biggest fallacies consumers make is assuming a company will absorb cost increases, they almost never do. The only case where you'll see margin compression is more due to an over supply, weakening demand, some outliar one time expense and/or increase in competition. We may have those factors in play, too, which will complicate this, but the impact will still be noteworthy.
Two - How much of our stuff is actually made in China these days? I know a lot comes from Taiwan, Vietnam, etc but I'm honestly not sure how much is actually coming from China, specifically. This is really the big question, and those are the goods that'll really feel notably more expensive.
Regardless, this is going to create some real turbulence in an already wounded industry. If I were in management at any of the big bike or component companies, I'd be doing some real head scratching as to how to best navigate this.
EDIT: On that note (how to navigate), it might seem to make sense to move quickly and add a bunch of product to your US warehouse before the tariffs hit but if I were in the driver's seat, I probably wouldn't be doing this. Capital isn't free, nor infinite and longer I tie capital up for the lower my return is on the sale of the product. Put simply, doing this would be to put my proverbial company in the situation its (possibly) already in - excess inventory in a warehouse somewhere that I can't move. I'd probably be looking to tighten up my product offerings, get real specific around what people really want and optimize on the SG&A side to keep my costs around where they are right now. There are other things...but I'll leave it here for my one paragraph answer
There have been some INSANE sales at the local Specialized dealer here in WNC. My understanding is when the shops got bought by a private owner back from Specialized corporate ownership, the warehouses were chock full of bikes and they just need to move them.
There are reports that there were (Still may be? ) a lot of bikes sitting in Taiwan waiting to come over.. One advantage to the company stores, they can frontload the shops with inventory that a regular LBS might pass on..
We're talking Stumpy 15's full Ohlins for 35% off. Brand new stuff that they just need to move asap. It was kind of bizarre to see.
Wonder if they’ll get all Kona and go buy one, get one free?
Most likely still more bikes coming.. Gotta move some bikes to make room...
Here is a timeline of tariff Trump did during his first term:
https://www.bicycleretailer.com/industry-news/2019/05/16/tariff-timeline#.XRfrmy2ZNQI
And the latest data for country or origin of imported bikes I could find on Bicycle Retailer News:
https://www.bicycleretailer.com/industry-news/2023/08/08/bike-imports-plummet-average-value-climbs
Nice! This is awesome. I honestly should be going to bicycleretailer.com everyday. So good!
You don’t?? The best was back in the day and having that big old Bicycle Retailer mag show up at the shop. Now we can cheat and it’s fingertip.
Most major brands have a Canadian warehouse/branch but not all of them get stuff shipped directly from Asia to Canada and instead go through the USA before getting to us so we will likely be impacted indirectly by Trump Tariffs.
Santa Cruz (bikes for the canadian market are assembled in SC,CA) and Shimano (everything goes through Irvine first) are two that I know could be affected.
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