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Kent CEO: Tariff threat looks 'very serious'

Published May 9, 2019

WASHINGTON (BRAIN) —If nothing changes very soon, a 25% tariff will hit most bike products imported to the US from China, starting at 12:05 a.m. Friday.

One bike importer said he’s already seeing the extra fees appear on documents for shipments arriving next week.

"It looks very serious. It may go for a week and a half, or go longer, but how do you plan to run a business this way?" asked Arnold Kamler, president and CEO of Kent International. Kamler said his company imports about 200 containers a week from China. "Our shipments for next week already show the 25% tariff. They had to get ready just in case."

The tariff increase had been threatened since last summer. In September, just as the Interbike Expo in Reno was about to open, the U.S. Trade Representative announced that an additional 10% tariff would be applied in a week's time on Chinese goods worth $200 billion annually, including about $1 billion in bike related products.

At the time, the USTR said the tariff would increase to 25% on Jan. 1, 2019. That was delayed twice, but last weekend President Donald Trump said the increase would occur this Friday because trade talks with China were stalled.

Kamler said he would have to pass on the extra costs to his customers, which would lead to retail price increases. "What choice do we have? The cash flow is brutal.“

The new tariffs are in addition to long standing tariffs on Chinese bike goods, which are generally in the 5-11% range. The tariffs apply to most types of complete bicycles, frames, parts and accessories. Helmets and lights, for safety reasons, are exempt.

Kent imports bikes for the mass market, including Walmart. It also imports the Univega USA line for IBDs. Some bikes are finished and assembled at Kent's BCA bike factory in South Carolina, but even those bikes are assembled using parts made in China.

Kamler wrote a column in The Washington Post on Wednesday about the situation, and said he was interviewed Wednesday for a CNBC news feature that will air Thursday. In The Washington Post piece, Kamler said he employed hundreds of Americans at the South Carolina factory, but would hire more if not for Trump's tariffs.

"These measures punish American businesses that have done nothing wrong. We play by the rules; this administration keeps changing them," the article concludes.

Kamler said he had been optimistic that the Trump administration would never increase the tariff to 25%, and because of that, Kent’s plans to establish a new bike factory in Cambodia with a partner have been put on hold. On Wednesday, he said he's somewhat less optimistic.

"If I was a betting man I'd say it's a 70-30 chance (that the increase won't occur)," he said.

The National Retail Federation said the threatened tariffs would disrupt small businesses.

“Tariffs are taxes paid by American businesses and consumers, not by China," said NRF's senior vice president for government relations, David French. "A sudden tariff increase with less than a week’s notice would severely disrupt U.S. businesses, especially small companies that have limited resources to mitigate the impact. If the administration follows through on this threat, American consumers will face higher prices and U.S. jobs will be lost. 

“We want to see meaningful changes in China’s trade practices, but it makes no sense to punish Americans as a negotiating tactic. If the administration wants to put more pressure on China, it should form a multinational coalition with our allies who share our concerns. We urge the administration to reconsider this tax hike on Americans and stay at the bargaining table until a deal is reached.” 

Topics associated with this article: Tariffs

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