It’s taken a while, but most Americans have finally come to realize that the new tariffs imposed on imported goods are in fact paid by US companies, not the countries where they are manufactured. What many still don’t realize, though, is how those same tariffs are actually crushing the American manufacturing they were ostensibly designed to promote.
It might sound counterintuitive. Even if misguided, the Trump administration’s tariffs are intended to encourage manufacturing in the US instead of sending those manufacturing jobs overseas.
The problem is that the tariffs often have the exact opposite effect. Take the nascent electric moped and light e-motorcycle manufacturing industry in the US, for example. Such 30-40 mph (48-64 km/h) electric mopeds offer street-legal rides that are significantly more affordable than larger motorcycles. These light electric motorbikes and e-mopeds are easier to produce than larger flagship street bikes, but still require specialized skills and significant investment in manufacturing capabilities.
Companies like Spark Cycleworks in Cincinnati, Ohio, have spent years making those investments, helping the company produce nearly 600 electric mopeds in its small US-based factory. However, despite building its vehicles in the US with American labor, the company is still feeling the crushing weight of tariffs that threaten its future.
The problem is that despite manufacturing occurring in the US, there is no domestic supply chain for many of the materials used in the mopeds.
Components like batteries, controllers, motors, and other critical parts are all produced in Asia – many of them in China. Spark Cycleworks Matt Schell explained that there’s simply no alternative and that such components are a huge part of the cost of production.
“Those components make about 50% of the cost of producing that bike and there’s no other option,” said Schell. “I’ve got nowhere else to go. I have to account for the tariffs on those parts.”
One of his last containers was hit with higher 45% tariffs after the initial wave of Trump tariffs, and the next container with his batteries will now see 145% tariffs.
While some might suggest that US manufacturers should just switch to producing components like battery packs locally, even these components are made with imported subcomponents.
“There are no domestic options for our motors, our controllers, and our batteries. We can make batteries by hand in the US, but all of those cells are going to be imported. So it doesn’t matter if we make the batteries here, they’re still going to get that tariff,” Schell added.
Spark Cycleworks’ electric mopeds were previously priced at around US $4,500 but Schell says that the new tariffs will force the price up to around $7,000. With that pricing uncertainty scaring off consumers, the company hasn’t sold a single bike in around five weeks.
via: WFSB
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