Taiwan's bike brands taking steps to ease impact of U.S. tariffs

Taipei, Aug. 11 (CNA) Leading Taiwanese bicycle brands Giant Manufacturing Co. and Merida Industry Co. said Sunday they have adopted measures to mitigate the impact of the tariff policies of the Donald Trump administration.

The United States announced at the beginning of August that it would impose a 20 percent tariff on imported goods made in Taiwan, effective Aug. 7.

The 20 percent tariff will be added to other pre-existing most favored nation (MFN) duties and industry-specific trade remedy tariffs, which will bring the overall tariff on Taiwan-made bicycles to between 25.5 percent and 31 percent.

Giant did not seem too perturbed by the situation, however, saying that having the new base rate set at 20 percent, which was close to its expectations, would reduce uncertainty and enable Taiwanese exporters to take measures to counter it.

The company said it was well-positioned to deal with higher U.S. tariffs by adjusting its production and shipments because it has built a global manufacturing base, diversifying its production out of Taiwan to China, Hungary, the Netherlands and Vietnam.

Although the U.S. is one of its most important markets, the latest tariffs were likely to have only a limited effect on Giant's global sales in the short term, the company said.

To deal with new levy, Giant said it has suspended any promotional campaigns in the U.S. market involving discounts and increased retail prices by 10 percent to absorb the spike in costs due to the new tariff.

Giant said the U.S. tariffs were likely to boost inflation in America, and it will closely monitor whether higher product prices will force American consumers to scale back their purchases before adjusting its marketing strategies there.

For its part, Merida said an increase in tariffs amid growing trade protectionism has squeezed exporters' profits and led to a restructuring of the global supply chain to ease the impact of the tariffs.

Merida said it will pursue a flexible global shipment strategy to achieve a balance between the new U.S. tariffs and its bottom line, but it did not feel the 20 percent tariff had put it at a competitive disadvantage with its competitors in China, Vietnam and elsewhere.

China currently faces a 30 percent levy and the final figure is subject to change before talks with the U.S. conclude, while Vietnam faces a 20 percent tariff.

Most importantly, however, Merida said the U.S. market did not carry too much weight in its global sales portfolio.

For the customers it does have there, Merida said it will work with them to determine how to deal with the tariffs and develop strategies to adapt to market changes.

As for bicycles it produces in China, those largely target the Chinese market, and no finished products are shipped to the U.S. from China, the company said.