Theres not a tariff between Taiwan & China, so why would their raw materials become more expensive?

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float , hammer , and jog

Because China will eventually have to pass the expense of paying the USA tariffs, an expense they've never had to pay.

China, and Chinese businesses, don't pay the tariffs. US businesses that import those Chinese goods do. Any financial cost to China will be from lost revenue due to US businesses importing fewer goods...

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"I'm thinking of a number between 1 and 10, and I don't know why!"

When comparing any "class" between countries you really need to do so on a PPP basis.

https://chinapower.csis.org/china-middle-class/
https://foreignpolicy.com/...adder-behind-itself/

We've always been Taiwan. We spoke with a Chinese factory in the beginning during the R&D phase, but they turned out to be a disaster. To date, every FLO product every sold has been manufactured Taiwan.

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Chris Thornham
Co-Founder And Previous Owner Of FLO Cycling

Here's a good starter but what you should really pay attention to are the recent Chinese on-shore bond defaults where companies routinely claimed to have 10x their outstanding debt in cash on their balance sheet and then, one day, they just default. This has happened about a dozen times since December. Why? The loan underwriting process is basically "Do you have any connections to the CPC or are you blacklisted by the government in any way?" If the answers are "yes" and "no" then you're approved. Need to take out a loan to build a factory? Great! Need to take out a loan for payroll and to buy raw inputs? Great! Production didn't sell and you're about to default? Well.... take out another loan! Ad infinitum.

A few months ago i ordered some custom mountain bike wheels from one of the Chinese manufacturers out there (BTLOS). I sort of felt guilty going direct to China like that but then realized all the lower level parts (except maybe valve stem) were made outside China. The Toray carbon from Japan, the DT Swiss hubs from...well Switzerland and Sapim spokes and nipples from Belgium. So the Chinese just provided the labor and they are very good at carbon fabrication. You can really see the global supply chain in the bike world...at least the higher end stuff.

Not just the US. The tariffs are only on what China supplies. Many bikes are assembled in the US from imported parts, so the tariff only applies to what came out of China. Both Shimano and SRAM are made elsewhere, so that's the group set and wheels in most cases. Seats and handlebars are also made in other places. If only the frame comes from China, even on a high end bike, the 25% would be on about 25% of the total cost.

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"...the street finds its own uses for things"

In a parallel story, bikes and bike parts made in the USA are on the proposed list for tarriffs to be imposed by the EU, in the next iteration of protectionism & retaliation.
Round 1
America puts protectionist tarriffs on aluminium, steel, etc.... EU applies WTO-sanctioned retaliatory tariffs, on things that will hit certain produce from the USA... orange juice, peanuts, kayaks, big ugly unreliable agricultural motor bikes.

Round 2... Trump puts more tarriffs on more stuff. Cheese, wine, Campag, aeroplanes without inbuilt software faults etc.
EU responds (with WTO permission again) - inc bicycles and components.
http://europa.eu/...se_IP-19-2162_en.htm

Hmmm...

This is more Lavender Room, but I think you might be conflating trade deficit and the Federal budget deficit? Those two accounts are two completely different "ledgers." Trade deficit is mostly private. Federal deficit is entirely public. There is some indirect connection, e.g. taxpayers not having to fully pay off the annual budget deficit gives us some disposable income we wouldn't otherwise have. And some of that extra income is spent overseas (but some is spent locally!) But it's a bit of a stretch to imply such a strong, causal connection as you do.

I think the real answer is just stupid simple: stuff is cheaper to make in other countries with lower standards of living and therefore lower labor rates. And we're not stupid: given the option and other things more-or-less equal, we buy the less expensive thing instead of the more expensive thing. People in other countries also buy the less expensive thing. End result: trade deficit. Just look at carbon wheels. Why buy the $3000 Enve when you can buy the $1000 Flo. (or whatever the price differential is). Enve's are great. Personally, I own Flo wheels to get 90-something percent of performance for 1/3 the price.

There are bikes like this, but it is a tiny tiny tiny percentage of the total.

The vast majority of bikes sold in the usa are both made AND assembled in taiwan (small part) and china (huge part).

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Advanced Aero TopTube Storage for Road, Gravel, & Tri...ZeroSlip & Direct-mount, made in the USA.
DarkSpeedWorks.com.....Reviews.....Insta.....Facebook
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Look up "twin deficits phenomena". Any country that produces less than it consumes will usually need to increase debt to make up the difference. Same as an individual. And as debt rises a country's "credit rating" will fall along with the exchange value of the currency. If you want a high trade deficit (and the people running this country do), you have to take measures to ensure that doesn't happen. It's a deal we apparently make with countries when we absorb their excess production... they buy our debt.

Most developed countries don't have a trade deficit; rather a surplus. Why is that? Taiwan where a lot of bike parts and high tech equipment are made isn't even a poor country. GDP/capita PPP is nearly as high as the US.

You can do it in North America from start to finish, in fact there are several advantages (say for wheels) to keeping everything in house (IE moulding and tooling on site):

https://nsmb.com/...osites-dustin-adams/

Maurice

Geez they need a like button on this forum.

to tell you - the bond default rate onshore was 0.8% as percentage of the overall market and 1.6% percent if you look only at high yield part of their market, china is the second biggest bond market after the us - that happened last year under pressure of trade war and market sell off. Care to venture what was default rate for bonds in the US; during the goldilocks for US economy??

Hello DarkSpeedWorks and All,

https://www.bicycleretailer.com/...9044095#.XOiBTYhKhEZ

Excerpt:

The total value of all global imports of the products we counted was $2.2 billion last year, meaning that Chinese imports accounted for exactly half of bike-related imports last year in those categories. If you count bikes instead of dollars, 95% of bike imports came from China last year.

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Trade World War: Bike industry caught up in tariff battles with China and Europe
WASHINGTON (BRAIN) — Some praise them, some loath them, but there's no denying that the U.S. bike industry — largely an importing industry — is feeling the effects of increased tariffs on Chinese imports, proposed tariffs on European imports, and tariffs on imported steel and aluminum.
BRAIN's coverage this week includes:

• Tariff Timeline: How we got here
• Some U.S. manufacturers support tariffs
• Industry testifies against EU tariffs
• What we import from China
• OIA tells Trum tariffs 'a huge hit'
• Tariffs may hit entry level/juvenile bikes hardest

Read More

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Cheers, Neal

+1 mph Faster