The Biden administration has reintroduced Trump’s tariffs on e-bikes from China. That’s 25% tariffs on imported e-bikes and bike components made in China. An additional 25% tariff on Chinese-made battery packs used by e-bikes comes into effect in 2026. Nearly 100% of bicycles sold in the U.S. are manufactured abroad, with the vast majority coming from China. It’s all part of the U.S. policy to counteract unfair subsidies in China and develop domestic supply chains. The big problem is that indiscriminately putting tariffs on China’s clean energy products – EVs included – goes against U.S. climate policy and decarbonisation targets, explains Andrew Campbell at the Energy Institute at Haas. And as there are no domestic U.S. e-bike manufacturers to help or domestic supply chains to strengthen, there will be no immediate benefits. But there will be an immediate downside. Though bike usage in the U.S. is very low, e-bikes can displace cars in a way that ordinary bikes don’t. Powered bikes are so easy to ride, particularly uphill and for long commuter-like distances. The goal should be to reach a critical mass of riders that attracts the doubting car commuters, and motivates local governments to make the sort of bike lane improvements already seen in Cambridge, Massachusetts that bring cyclists onto the streets.
I recently returned from a trip to Cambridge, Massachusetts and was astounded by the number of cyclists riding along on the city’s extensive, new bike lane network. It reminded me of videos I’ve seen of bicycle-friendly northern European cities like Utrecht. Most of the riders had the focused look of people who had somewhere to be – work, school, etc… These were not leisure riders. Many of the cyclists were on electric bicycles (e-bikes).
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SOURCE: Cambridge Bike Safety
Biden reinstates Trump’s tariff on e-bikes
More and more city-dwellers are using e-bikes as an alternative to passenger vehicles. In doing so they are reducing local air pollution, greenhouse gas emissions and traffic congestion. Given the alignment of e-bikes with federal policy goals I was shocked to learn that President Biden’s administration has reinstated tariffs that President Trump placed on e-bikes in 2018 and that the Biden administration had previously paused. Trump had included e-bikes among the $250 billion in Chinese goods that he targeted with tariffs due to unfair technology transfer and other practices. No reason was given for the e-bike tariffs in particular. What’s clear though is that the reinstated tariffs will raise the prices of e-bikes and slow down e-bike adoption, just as momentum for this mobility option begins to grow.
18% of bike sales in 2023
U.S. e-bike sales have been growing rapidly, climbing from 2% of pedal-only bike sales in 2016 to more than 18% of pedal-only bike sales in 2023, representing over one million bikes. This trend is despite the average e-bike costing $2,000 to $3,000, as compared to $1,000 for a typical commuter pedal-bike. According to the American Community Survey, just 0.5% of people bicycle to work and that number has not changed much for decades. But I am optimistic that e-bikes are a technological innovation that could increase how often people commute on bikes.
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SOURCE: Department of Energy
E-bikes more likely than bikes to replace cars
E-bikes are one more technology that has been enabled by low-cost lithium ion batteries, like mobile phones, laptops, electric vehicles and large scale energy storage. The extra power from the electric motors supplements human pedal power to move larger bikes that can carry more cargo and passengers. The bikes make it easy to climb hills and appeal to a wider range of riders. Also, e-bike cyclists arrive at work less sweaty and smelly than their pedal-bike counterparts. In addition to private ownership, e-bikes are part of the shared bicycle networks that are popular in many urban areas like Cambridge. With these advantages, I expect e-bikes will replace more passenger vehicle trips than pedal bikes have. Research on e-bikes in Sweden bears this out.
Nearly 100% of bicycles sold in the U.S. are manufactured abroad, with the vast majority coming from China. The last major U.S. bicycle manufacturer was closed by 1999. About 3% of bikes sold in the U.S. are assembled domestically, but using Chinese-made components. China has quickly dominated the e-bike market too, taking advantage of their battery dominance.
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SOURCE: Haidong Bikes
As of June, the Biden administration has put into effect 25% tariffs on imported e-bikes and bike components made in China. An additional 25% tariff on Chinese-made battery packs used by e-bikes goes into effect in 2026. Biden, like Trump before him, relied on Section 301 of the Trade Act of 1974, which gives the executive branch broad discretion to put in place new tariffs without a robust regulatory cost analysis. E-bikes are among billions of dollars of Chinese goods that are being targeted.
Indiscriminate tariffs on China’s clean energy products conflicts with climate policy
The President’s tariffs on Chinese goods are intended to counteract unfair subsidies in China and develop domestic supply chains. However, the administration’s trade policy conflicts with its climate policy. James Sallee has described how the new 100% tariff on electric vehicles, for example, is bad for the global environment and could slow down innovation among U.S. automakers. The rationale is even weaker for tariffs on e-bikes because there are no domestic manufacturers to help or domestic supply chains to strengthen.
Since essentially all e-bikes sold in the U.S. are made in China, the 25% tariff on Chinese e-bikes is essentially a tax on all e-bikes. Sure enough, e-bike companies have already announced price increases. These companies face little competition from non-Chinese manufacturers to keep them from doing so.
The research on the Swedish e-bike market that Lucas Davis blogged about found that e-bike rebates flow entirely through to buyers, that the rebate attracted new buyers and that the recipients drove less. Because the Biden e-bike tariff is essentially the opposite of a rebate, I would expect 100% of the tariff cost to flow through to buyers, fewer e-bike buyers and more driving. As Lucas has pointed out, a shift from driving to biking in cities can have a number of societal benefits including reducing traffic congestion, lower tailpipe emissions and the virtuous cycle of non-cyclists being inspired to start riding when they see other people on bikes. Reaching a critical mass of riders can also help motivate governments to make the sort of bike lane improvements I saw in Cambridge that bring more reluctant cyclists onto the streets.
The Biden administration should remove the tariffs on e-bikes and let the market continue its rapid growth. Going forward, Biden should set the precedent of conducting more thorough and transparent evaluations before applying Section 301 tariffs, including considering the environmental impacts of tariffs. With changes like these, the federal government can help our cities roll into a cleaner and less congested future.
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Andrew Campbell is the Executive Director of the Energy Institute at Haas at the University of California.
This article is published with permission.
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