‘Angriest Man’ Creates Tariff Headache for Made-in-USA Bicycles
(Bloomberg) -- Arnold Kamler has experienced the trade dispute between President Donald Trump and China first hand, and is trying to respond as quickly as possible.
His company, Kent International Inc., assembles about 400,000 bikes annually at its factory in Manning, South Carolina. But this is no shield from the latest round of tariffs, since -- in an effort to spare domestic manufacturers -- the Trump administration has slapped tariffs on imported components and materials. And like many American companies, Kent imports parts from China to stay competitive.
“Seriously, we are working on how to purchase elsewhere,” said Kamler, who is chief executive officer for the Parsippany, New Jersey-based company. “It will take three years if we aggressively pursue, and who knows what the angriest man in Washington will do next?”
His question shows how U.S. businesses are grappling with the question of whether to uproot their supply chains -- a time-consuming and expensive process -- or wait for the political winds to change. Both options are risky.
Bicycle makers did get a small reprieve this week when some safety items, including helmets and lights, were removed from the latest tariff list on Chinese goods that will go into effect on Sept. 24. But Kent still faces an additional 10 percent tariff on the bulk of its imports.
‘Expansion on Hold’
When Kamler testified before the administration last month during hearings on the tariffs, he pointed out that production at the South Carolina plant began in 2014, after a push by Walmart Inc. to purchase more American-made products. Jobs at the factory have surged to 167 from 47 when it started. According to Kamler, Kent was bucking a trend of almost all bicycles purchased in the U.S. coming from China.
“But the uncertainty concerning tariffs on such a huge amount of components, and steel and aluminum, have forced us to put any expansion on hold,” Kamler said during the hearing. He has said that exempting components from duties while keeping them on complete bicycles would allow his plant’s payroll to swell to about 400 people.
Walmart Inc., a Kent customer, raised concerns about parts, specifically bicycles, being targeted in a letter this month to the administration. The world’s largest retailer said the tariffs would make U.S. manufacturing “uncompetitive.”
For now, Kent, which also sells bikes in stores such as Target and Big 5 Sporting Goods, is following other manufacturers in a rush to source from other countries, such as Vietnam, Thailand and Cambodia. But moving a factory is not going to happen overnight.
“This is no small undertaking,” Kamler said.
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