Should We Embrace the Domestic Bicycle Production Act?

The Domestic Bicycle Production Act seeks to flatten the investment necessary for manufacturers to produce bikes and e-bikes on U.S. soil.

Three parts compose the bill. The first part would suspend tariffs on components for 10 years. By reducing the cost to import components like brakes, handlebars, derailleurs and wheels, it should encourage domestic bicycle assembly. The second part creates a domestic, transferrable e-bike production tax credit, which would create a financial incentive for companies to produce e-bikes domestically. The third part would create what is being called the U.S. Bicycle and E-Bicycle Manufacturing Initiative which would make low-interest, 12-year loans for companies to set up or expand manufacturing in the U.S. by buying capital equipment.

The first part, which would suspend tariffs, doesn’t seem like much on paper, but it’s a big deal as a set of tariffs that were suspended during the pandemic are now going to hit imported bikes and e-bikes beginning in July. Some of the products that were part of the Section 301 exclusion carry a 25 percent tariff.

The second part, because it focuses exclusively on e-bikes, will create a real incentive for manufacturers to begin domestic production of motors and batteries. The domestic production of components such as brakes and drivetrains still seems a stretch.

The third part, which offers low-interest loans over a 12-year term, would make purchasing the sorts of tools necessary to produce bikes and e-bikes within the realm of many small businesses that struggle to expand due to a lack of capital or sufficient credit.