Economic impact of Chinese tariffs felt by businesses in the Bay Area

SAN JOSE, Calif. (KTVU) - The international business effects of the escalating tariff war are being felt at the local level here in the Bay Area. One industry, the bicycle industry is preparing to take a financial hit.

“We’ve recently gotten emails from our vendors notifying us that with the tariff increase, the bicycle components, bikes, everything pretty much in the industry is gonna go up,” said Karen Clifford of Bicycle Express.

She says five-out-of-six products sold inside the Downtown San Jose store are imported from China. The label “Made in China,” that’s stuck to most items might better read “Costs more because it’s from China,” according to San Jose State University strategic management professor Robert Chapman Wood.

“That means the prices for many different products rise dramatically. Products from China become uncompetitive with products from other countries. And companies that do everything from semiconductors to bicycles wind up paying a huge premium on stuff they really need,” Wood said.

In total, there are 194-pages of products effected by the increase in tariffs on Chinese goods. Some, such as baby highchairs and infant walkers, are exempted. But other items, from furniture, to auto parts, to luggage, will now cost more. For Bicycle Express, rising costs will be passed on to customers.

“I know we’ll have to end up charging more for bike parts, because bike products will end up costing us more,” said Clifford.

Some customers say with Bay Area costs, driven by housing, continuing to climb, an increase to maintain their bicycles could push them to the brink.

“I’m struggling as it is,” said Bicycle Express customer Jesse Gonzalez, as he prepared for a ride over to SAP Center at San Jose. Added fellow bicyclist Joey Tribiati, “I’m already paying up the ying-yang for everything. I really don’t have too much money to spare.”

Business experts say if consumers start to change their spending habits, the result could be a slowing economy, and less opportunity for existing businesses, and for newbies hoping to get in while things are good.

“It can do terrible things to the economy. But, it won’t do terrible things for the economy if it lasts a couple of weeks. It’ll do terrible things for the economy if it lasts months and months,” said Chapman Wood.

Both business and consumers are hopeful shared pain by both sides in the trade dispute will lead to de-escalation, and a lowering of tariffs sooner, not later.