Bikes imported to Australia to be hit by unexpected 5% tariff
The Australian Department of Home Affairs has ruled that, as of today, power-assisted bicycles imported into Australia will attract a 5% + GST tariff, likely leading to a price increase for new e-bikes. The writing is also on the wall for imported premium complete bicycles and framesets, with a similar motion currently being considered.
Update (09/03/2018: The 5% tarrif application for non-powered bicycles and framesets has been revoked.
The 5% tariff on bicycle imports has long existed but due to a lack of local manufacturing it has been exempted since 2001. Requests for the revocation of the exemption must, and have been, made by local manufacturers. It’s known that Australian electric-bike company Stealth is responsible for the e-bike revocation. However, it’s not yet known who’s responsible for the revocation that’s likely to affect all regular bicycle imports.
It’s suggested that Australian-made bikes make up less than 1% of those sold in Australia. It’s a similar story to what the footwear industry saw years ago, where a single manufacturer responsible for less than 1% of market share caused a price increase for everyone else.
Imports made from countries with a free-trade agreement with Australia are exempt from the tariff, meaning imports from the likes of China, Indonesia, Cambodia and the United States will be unaffected. However, bikes from Taiwan, Europe and India will be hit with the tariff. Given many of the world’s premium bikes are still manufactured in Taiwan, this will directly impact Australia’s bicycle industry. Many lower-end bikes, including those sold by supermarkets, are unlikely to be impacted.
The tariff comes into effect from the date the revocation submission was first made. As a result, all e-bikes imported (from outside of free-trade agreement zones) since January 9 2018 will attract the 5% tariff. The revocation likely to impact all bicycles, including frames and framesets, was submitted on January 30 (see page 14), and while it’s currently pending, Peter Bourke of Bicycle Industries Australia (BIA), believes it will be passed in a similar fashion to the e-bike tariff.
With a 60-day approval process from the date of the submission, and with no government requirement to publicise such a thing, this new tariff has certainly caught the industry off-guard. Bourke suggests the 5% is simply too large a sum for the industry to absorb and so price rises are the most likely outcome.
“The industry is disappointed and we believe it’s the wrong decision,” Bourke told CyclingTips. “We’ll have to deal with it. It will affect business and will affect consumers.”
Andrew Garnsworthy is the general manager of Advance Traders, the Australian importer for Merida, BMC, Norco and other brands. He told CyclingTips that the new tariff will flow through to consumers in less than a month.
“All our e-bikes are sourced from Taiwan, so they will be charged the 5% import tariff,” he said. “We expect a price increase to take effect in mid-March. We are holding pricing for retailers and customers that have already committed to bikes for order.
“It’s unlikely retailers and wholesalers will be able to absorb the price increases. Should the 5% import tariff flow through [to all bikes], our belief is that it will have a negative impact on both jobs in the Australian cycling industry, and potentially make cycling less accessible to people. That’s our ultimate concern.”
Martin Clucas, sales and marketing manager at Giant Bicycles Australia, explained that for the Taiwanese company, just about any bike over the value AU$2,000 will likely be affected by the tariff.
“It’s come about all of a sudden,” he said. “The whole process is strange.” Given it’s happened so quickly, Clucas wasn’t sure whether we’ll see price increases straight away, before adding “the reality is our expenses will increase”.
BIA is planning to apply for tariff concession orders for both the e-bike and regular bicycle tariffs. For the former, the argument could be based on the fact that the large majority of e-bikes being imported are of pedelec-design and meet Australian standards, unlike the majority of those being sold by Australian-based Stealth.
This news comes at a time when the industry is waiting patiently until July 1 for Australia’s $1,000 GST-free import threshold to be reduced to $0, a move that will hopefully offer assistance to a slowing industry.
It’s still early days in understanding what this tariff will mean for the local industry. How will this new tariff impact bike prices in Australia? Will BIA be able to overturn the tariffs? Will bikes imported privately need the assistance of a customs broker? We’ll know more soon enough.