WASHINGTON (BRAIN) — The Trump administration on Thursday announced new Section 301 tariffs of 10% and 12.5% that apply to 99.4% of all imports, including those from the major bike-producing nations of Taiwan, China, Cambodia, Vietnam and Malaysia.
While bicycle products are not excluded from the tariffs, the way they are being imposed on some of the largest bike-producing nations is good news for some importers.
The new tariffs replace an existing 10% tariff imposed under Section 122 which was set to expire at 12:01 a.m. Friday. The administration imposed the Section 122 tariffs after the Supreme Court ruled in Febriary that its use of the IEEPA law to impose tariffs was illegal. The Court of International Trade ruled the administration's use of Section 122 illegal, and some importers have hopes of eventually being refunded tariffs they've paid under Section 122, but the CIT decision is under appeal.
"Net of MFN" carve out for Taiwan, EU, Japan and others
A "net of MFN" exception applies to imports from Taiwan, the EU, Japan, Korea and Switzerland, meaning that where a product's existing Most Favored Nation duty is less than the nation's new Section 301 tariff, the tariffs will not "stack."
Many bikes and some other bike-related products have long-standing MFN duties for 5.5% - 11%. So for example products from Taiwan and EU with MFN duties under 10% will increase to 10% but no higher, while products with MFN duties over 10% will remain at the MFN rate, with no 301 addition. This is in contrast to the 10% Section 122 tariffs, which did stack.
The same "net of MFN" rule applies to products from three countries that are are subject to the new 12.5% 301 tariff: Japan, Korea and Switzerland. Tariffs on products from those counties with MFN duties under 12.5% will be raised to 12.5%, while products with an MFN of above 12.5% will stay at their current MFN rate, with no 301 addition.
Section 301 allows the president to impose tariffs on countries that engage in “unreasonable or discriminatory trade practices,” including forced labor. The administration said some countries don’t have laws against the importation of products produced with slave labor, while others have laws that are not enforced effectively.
The tariffs apply to imports from Canada, but not Canadian imports that are subject to the United States-Mexico-Canada Agreement, which includes Canadian-made bicycles. Separately, Trump has threatened a 50% tariff on Canadian imports — including those covered by USMCA — under a different trade law (Section 338 is part of the Tariff Act of 1930, better known as the Smoot-Hawley Act.) That tariff would take effect Aug. 18.
The notice says that products tariffed under Section 232, which includes some steel and aluminum items, are not subject to the new tariff. That includes steel bike chains from China and some other items used for manufacturing.
Most of the bike-producing nations are on a list of 54 countries whose products are hit with the 12.5% tariffs. The six countries whose products are subject to the 10% tariff are Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan.
A 431-page notice from the U.S. Trade Representative includes details.
