Tucson bike store already feeling effects of new tariffs

Businessman Steve Morganstern says business model for buying a bike has changed

Tucson businesses bracing for tariff war

TUCSON, Ariz. (KOLD News 13) - The United States and China have gone ahead with their latest tariff increases on each other’s goods, potentially raising prices Americans pay for some clothes, shoes, sporting goods and other consumer items.

The 15% U.S. taxes apply to about $112 billion of Chinese imports.

Knowing this was on its way, businesses began to prepare months in advance.

“Six months ago, we were told get what you can.” Steve Morganstern is the owner of Bicycle Ranch on Oracle near Ina in Tucson. He's been cycling since he was 11, and has had the store for over 6 years.

Now, over the past year he's had to shift gears with his strategy of running his business.

"Last year when the first initial tariffs came out the bike manufacturers and accessories were all affected," said Morganstern.

Everything you'll find his shop came from the two main manufacturers in China or Taiwan. Which means all of it is now more expensive. Today’s new 15% tariff on Chinese imports effects helmets, tubes, and the bike itself.

"This year we’re definitely seeing instead of $150-$200 dollar increase on the same bike we’re seeing potentially a $400 dollar increase.”

The new price hike is why Steve took a risk, ordering more bikes than he has in the past last week. He said manufacturers sent out an email notifying stores like his to buy now before the tariffs went into effect.

But where he may be saving money, he's also taking a risk.

"If we bring in bikes that’s the wrong size and wrong color of what someone wants....so we’ve definitely laid out a greater risk to hopefully reduce some of that cost long term.” said Morganstern.

But by avoiding the tariff, he’s still having eat another cost: Shipping. Since stores like his all have the same idea to buy now and there's only so many ships to bring over the supplies.

Morganstern can only delay paying a higher price for so long.

“We have bikes coming now that are under the lower price because when we go to do another big fill in towards Christmas that time of year they’ll definitely be higher priced.”

Morganstern said it may have some people delaying their purchases or thinking twice completely, calling cycling a want-based industry not needs-based. But he said luckily a few of their brands they sell allow them to get more bang for their buck, so in some areas they can still provide a reasonable price.

He also said the business model for buying a bike has changed because of tariffs.

"The business has gone from negotiating like cars to buying a computer where the price is the price. People aren't quite prepared for that. And the business model has changed because of things like online sales and the tariffs. So it's about reeducating the customer that you have to pay what the price is.

For now, there’s no other option for Steve but to keep moving forward. "We just have to ride it out and deal with what it is.”

As he and his family shoulder the effects of a trade war, praying it doesn’t derail what he’s spent years building.

"It’s a family thing, a family business. Everyone’s all in and it took a lot of years to find out what I wanted to do when I grew up and I don’t think there’s a second option," said Morganstern.

The United States Trade Representative released a list of everything that will be affected. It’s 122 pages long.

These new tariffs could cost the average American one thousand dollars a year. Another round of tariffs on Chinese imports is set to go into effect December 15th.

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