Is it time to backpedal on bicycle import tariffs?
Few manufacturers appear to benefit from the levies, while cost is usually passed on to consumer
Canada has a wide selection of great bicycle brands, but finding a bicycle that was actually made in Canada can be a challenge.
That has some people raising the question: what's the purpose of this country's import tariffs on bikes, if the cost is simply passed on to consumers?
Is there a significant bicycle manufacturing base in Canada worth protecting, or would consumers stand to gain if officials rethink the tariffs?
Importing a complete, assembled bicycle will cost you 13 per cent in duty. If you're just bringing the frame in, that's a five per cent tariff, and if you're importing complete wheels, there's a 6.5 per cent tariff.
Anyone importing bikes will pay — whether you're an online shopper, or major bike company.
According to Statistics Canada, 1,563,604 bicycles were imported last year, at a value of a little more than $300 million. There was roughly $29 million in bike frames, and just over $5.5 million in wheels. The tariffs on those imports added up to a little less than $50 million.
Quebec-based Devinci has managed to buck the overwhelming trend for Canadian bike companies to source their bikes overseas, largely in China, Taiwan, and Cambodia.
But otherwise, the exceptions are small, custom bike brands — and the consumer is usually paying such a high price that tariffs aren't exactly a consideration.
That's the case for Dekerf, owned by Chris Dekerf in Richmond, B.C. Dekerf makes between 80 and 100 bikes a year, basically by himself. The price will start around $6,000 and go as high as $50,000 in exceptional cases.
"My bikes don't really compete against bikes that are affected by tariffs," said Dekerf. "It's just off my radar."
Offshore supply chain
But in Port Coquitlam, the question of tariffs is much more of an issue for Norco, one of Canada's largest five bike brands.
According to vice-president Dave Overgaard, the company has relied on foreign markets for years. Naturally, Overgaard favours getting rid of the tariffs.
"Do the right thing for the environment and do the right thing for people's health, and make bikes cheaper and more accessible to people," he said shortly before catching a flight to a trade show in Taiwan on Monday.
Overgaard said Norco has long sourced frames overseas, but the company brought about half of its bicycle assembly operations back to Canada for awhile — that ended, however, about 10 years ago when it shuttered the Langley facility where it built bicycles and assembled wheels.
Global economic forces
Overgaard said it wasn't financially viable to do the work in Canada. But, that may be changing yet again, as bikes get more expensive and the economic balance in some countries shifts.
"We're seeing inflation in traditional countries where bikes are sourced from," he said. "There are manufacturers — or brands — in Canada that would be looking at ... moving assembly back."
According to Adam Pankratz, adjunct professor at UBC's Sauder School of Business, it might be time to do away with the tariffs.
"Removing tariffs would likely, principally, benefit the consumer, because then you'd be able to bring in bikes, presumably for cheaper," said Pankratz, adding that the argument in favour of tariffs is limited to protecting jobs.
But he said if the goal is to encourage people to get on a bike because it's better for the environment, there are other incentives or programs the government could use that might be more effective, like building infrastructure or offering rebates.
Meanwhile, Overgaard said he's sensitive to how damaging a sudden cancellation of the tariffs could be to Devinci and others making bikes in Canada.
But he added that if supporting those companies is the government's goal, there are tax incentives and other ways to help them — ways that wouldn't cost the bulk of the Canadian industry and its customers.
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