LAKEWOOD, Calif. (BRAIN) Taiwan-based Tern Bicycles U.S. office will be on the hook for about $1 million in unexpected tariff fees if shipments that are currently in transit dont clear customs before next Wednesday.
Until Wednesday this week, e-bikes from Vietnam were subject to no tariffs at all. But the reciprocal tariffs announced by President Donald Trump raised the tariff to 47% (57% for standard bikes). The unexpected charges would be due nearly immediately after the products clear customs. Our customs broker normally gives us terms (on duties), but thats for $20,000 or $30,000. Not $1 million, said Steve Boyd, Tern's general manager for North America.
Even though Tern is taking steps to avoid the charges, their size reveals the impact of the new tariffs. Tern sells expensive e-cargo bikes, but is still a medium-sized brand in this industry. Larger brands that also import from Asia face proportionately larger unplanned-for tariff payments after Wednesday.
The company will likely avoid the new fees by expediting a container that is currently in port in California by truck to the brands California warehouse. Tern had planned to ship that container by train to another warehouse, but that risks missing the 12:01 a.m. April 9 deadline, when the reciprocal tariffs take effect.The deadline applies to shipments that are"loaded onto a vessel at the port of loading and in transit on the final mode of transit or withdrawn from a warehouse for consumption" after that deadline, according to Trump's executive order.So shipments that are loaded onto a ship before the deadline will be duty free, as long as the ship is the "final mode of transit."
"With Vietnam being a day ahead of us, I told the factory not to ship us anything after the 8th to be safe," Boyd said. If any shipments appear to be in danger of missing the deadline, the company could divert them to Canada or Mexico as a last resort, he said.
For Tern, the new tariff is simply a non-starter; Boyd doesnt see a way forward in this market if it is imposed.
I dont want anything with 47% duty, he said. I have some inventory here, and I have one container we know is safe, several more (in transit) that might be safe. After that I don't know, I'm hoping something changes.
Adjusting wholesale and retail pricing to account for a 47% cost increase is impossible, Boyd said. The notion that everyone in the supply chain will sharpen their pencils is not realistic. If we had got just a 10% hit youd go back and see what we could make work. But 47%, I just said, dont ship us anything else until we figure it out.
For the longterm, Boyd said Tern will look at diversifying its production. But the brands e-cargo bikes are specialized machines; setting up factories to produce them is not quick process. Tern has bikes for the European market assembled in Portugal and might be able to reduce tariffs by having its U.S. bikes made there, he said.
In the short term, Terns options now include hoping that President Trump negotiates a deal with Vietnam and drops the reciprocal tariff. And there is hope: Trump reportedly talked with Vietnam's leader, To Lam, on Friday.
Id be shocked if this could last very long; its already crippling the global economy. Even (Trump's) yes men are going to turn on him at some point, Boyd said.
To that end, Boyd is urging all industry members to contact their representatives in Washington.
I live in California: All my representatives are Democrats, and Trump isnt going to listen to them. But around the country many people in the industry have GOP representatives and senators.
Blow them up (with letters), Boyd said. Tell them, my industry cannot survive. And not just owners, have 10 of the staffers do it to, he said.
PeopleForBikes has a template(linked from the organizations tariff FAQ document)to help industry members draft a letter to their representatives.
Ryan Birkicht, the organization's communications director, said, "We encourage PeopleForBikes members to reach out to us and we can help them identify their members of Congress and provide their contact information and template language to expedite the process."
