From SCORE Richmond by Doug Carleton:
Maybe even a lot more depending on which bike. Tariffs again. One specific example illustrating last week’s post, “Higher Prices at the Store” is the bicycle industry. For example, a Richmond, Virginia company founded in 2014 makes lightweight bikes for children. It has generally been selling 400 to 500 small two-wheelers a year. It designs the bikes and they are made in China. The company paid a 10% tariff on its last shipment, and if new tariffs are imposed on certain consumer goods the cost to the company could even go higher forcing it to pass along most or all of it to their customers. What that would do for their sales is hard to predict, but a good guess would be that their selling prices would have to go up with potentially negative effect on sales and earnings..
China dominates the American bike business. 90% of bikes with small wheels come from China. Many other bike accessories such as coaster brakes (80%) and signaling equipment (approximately 70%) come from China as well. Almost 100% of imported rubber tire tubes come from Taiwan Vietnam or China.
So there is your next bicycle, and that is just one specific industry. Other things such as furniture and clothing could be dramatically affected. How many small businesses that have Chinese-made components have started thinking about a strategy to deal with higher tariffs? Looking even longer term, how might lower sales and earnings affect the ability to borrow money for expansion, inventory financing, working capital and other needs? We may be looking at a ticking time bomb.