Uber Asks for Chinese Tariff Exclusion as It Cranks Out E-Bikes
(Bloomberg) -- Uber Technologies Inc., which is producing a new generation of its electric bikes in China by the thousands, has asked the U.S. government for an exclusion from new tariffs on Chinese imports.
Uber has ambitious plans for its bike and scooter business, and the tariffs could pose a significant cost for the San Francisco-based company. Uber now makes nearly 1,000 electric bikes a day in China, said two people familiar with the matter, who asked not to be identified because the information is private. The ride-hailing company has allocated more than $1 billion to spend on scooters, electric bikes and other alternative forms of transportation next year, Uber Vice President Rachel Holt said in a recent interview.
Uber filed a request, which was posted Monday by the Office of the U.S. Trade Representative, to exclude electric bicycles from a list of $16 billion in Chinese imports hit with a 25 percent tariff.
As Uber and startups like Lime and Bird Rides Inc. churn out thousands of electric scooters and bikes in China that are destined for U.S. streets and sidewalks, these companies have been thrust in the middle of a global trade war. The Trump administration imposed the 25 percent tax in August on $16 billion worth of Chinese imports, including scooters and electric bikes, in the second round of duties as the U.S. angles for a trade deal with China.
Uber said in its filing posted Dec. 17 that the imported bikes are owned by its Social Bicycles subsidiary and are rented through the Uber smartphone app in 12 U.S. cities, including Washington and San Francisco. That service is known to consumers as Jump Bikes. Uber purchased the company in April.
On Tuesday, Uber shared the designs for its second iteration of Jump Bikes. They have removable batteries, chain locks and other features to make them more resistant to wear and tear. Uber also rents scooters on the streets of Austin, Texas; Santa Monica, California; and Los Angeles. Through a partnership with Lime, riders can book scooters in four other cities using the Uber app.
“We really believe that Uber is really the only company that’s positioned to be a one-stop shop for getting around your city,” Holt told the Washington Post. “We are all in on this space, and we have a meaningful -- more than a $1 billion budget next year -- that we’ve allocated to our own efforts in the space.”
Uber has also held acquisition talks with competitors Lime and Bird as those companies seek to raise new funds, people familiar with the matter have said. Bird has denied any interest in selling, and Lime has declined to comment.
The 25 percent duty “is causing disproportionate and severe economic harm to U.S. interests,” while failing to address allegations of Chinese theft of intellectual property and other trade concerns, said Uber, without disclosing financial information. The company is currently preparing financial disclosures to be published ahead of an initial public offering next year.
Ninety-six percent of all electric bicycles imported into the U.S. in 2017 were produced in China, and U.S. businesses have no viable domestic or third-country alternative, Uber said in its filing.
Higher costs from the tariffs come at the expense of Uber’s further investment in new technologies and product development, expansion of plants and U.S. job creation, the company said in the trade filing. The duties put U.S. businesses at a disadvantage to foreign competitors, it added.
The tariffs will also result in higher prices and reduced availability for customers, Uber said. “This is particularly harmful to those Americans who otherwise stand to benefit the most from electric bicycles, including those who are aging, face physical limitations, are less affluent, or live in hilly areas or communities underserved by public transportation,” the company said in its filing. “Uber is deeply concerned by these negative consequences.”
Thursday is the deadline for companies to file requests for duty exclusions from products on the $16 billion list, and as of Dec. 14, almost 1,000 requests had been filed, according to the USTR. Decisions are based on whether a product is available only from China, whether duties “would cause severe economic harm” to the company or U.S. interests, and whether the item is strategically important.
The administration is also considering almost 10,800 exclusion requests from initial duties imposed in July on $34 billion in goods. As of Dec. 14, 1,487 requests had been denied, while 664 were being reviewed by U.S. Customs and Border Protection “to determine whether an exclusion would be administrable,” according to the USTR.
Trump has also imposed a 10 percent duty on an additional $200 billion in goods, but a planned increase to 25 percent on Jan. 1 has been delayed until March 1 as the U.S. and China discuss a possible trade deal.
©2018 Bloomberg L.P.