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'A shot in the dark': State Bicycle was one of the few brands to ask for a tariff exclusion. They got it.

Published September 20, 2019

TEMPE, Ariz. (BRAIN) — While requests are being accepted until Sept. 30, so far just five bike companies have requested that their products be excluded from new tariffs imposed by the Trump adminstration. One of them, State Bicycle Co., received the exclusion.

The small brand — which sells primarily consumer direct but also through several hundred bike shops — will get refunded for the new tariffs it has paid since last year, and will not have to pay those tariffs on future imports until at least next summer. The exclusion for the singlespeed bikes applies to all importers, not just State.

"We got some good news today!" State co-founder Mehdi Farsi told BRAIN Friday. "I'm feeling good about it, I'm still trying to digest it."

By coincidence, BRAIN had spoken with Farsi just a day earlier for an article about the company's shift of some bike production from Taiwan to China to avoid the tariffs. Farsi didn't know about the exclusion grant until Friday morning.

He said the company already has orders in the pipeline with a Taiwanese factory, and it already planned to continue some bike production in China. So the exclusion won't cause the company to reverse course. "At the very least it gives us a lot more flexibility in what we are doing ... we have a lot more options."

The exclusion expires Aug. 7 next year; the idea is to give importers time to shift their production out of China. The administration continues to negotiate with China, meaning some change is likely before then. 

According to the U.S. Trade Representative's website, five industry importers have requested exclusion from the round of tariffs that the administration announced last September — although other bike companies and trade groups have requested exclusions from other rounds of tariffs.

Those that asked for exclusion so far from the September 2018 round are State, Parlee, Delta Cycle, Boaz Audio, and Priority Outdoor Products, Inc. Each requested exclusion for specific product categories; Parlee, for example, filed separate requests for exclusion for carbon frames and carbon forks. Delta requested exclusion for two-bike storage racks. 

State Bicycle was the first of the group to file its request, in July. The USTR has not made a decision on the other requests, which were filed in August and September.

"It was a bit of shot in the dark," Farsi said. "At the same time it (the request) wasn't a tremendous undertaking, so we thought we might as well ... anyway, someone saw some validity in our logic and it went through."

Farsi said that the company was largely able to absorb the tariff when it was first imposed, at 10%, last September. But it went up to 25% in May, and was scheduled to go up to 30% on Oct. 1. 

"When it was 10% it wasn’t necessarily worth moving (production). When it went up and up, it became more clear we needed to do something," he said. 

The tariff forced State to increase some of its retail prices for the first time, and to end free shipping as well. 

The end of free shipping to online customers was a boon to State's bike shop customers, Farsi said. "We had a strong summer with our wholesale sales. Taking away the free shipping was probably a contributing factor. I don't know that we are necessarily going to go back to free shipping."

Information on requesting exclusions from the round of tariffs imposed on Sept. 24, 2018, are at: Requests are being accepted until Sept. 30. Information on requesting exclusion from this and other tariffs is on the PeopleForBikes website.

More: State Bicycle's exclusion request.

State Bicycle's letter announcing tariff exclusion.

Topics associated with this article: Tariffs

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