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article imageElectric scooter startups are about to run into Trump tariffs

By Karen Graham     Aug 19, 2018 in Business
As electric scooter-rental startups like Bird and Lime battle for market share on American streets, in a matter of days, the budding companies will be slammed with a slew of Trump tariffs.
Xiaomi, the so-called Apple of China, has emerged as a leading supplier of scooters for Silicon Valley transit startups. The rebranded Xiaomi scooters have been deployed across US cities by scooter startup, Bird, which in May locked up a deal with the company worth tens of millions of dollars to become one of its vendors.
Xiaomi scooters are also used by Bird competitor, Lime. The other major scooter-maker is Beijing-based Segway/Ninebot (it supplies for Lime), which has a close relationship with Xiaomi and counts it as a backer. So, seeing as most US e-scooter companies rely on vehicles manufactured in China, the coming slew of tariffs will hit the two-wheeled revolution hard.
An electric scooter belonging to the startup Bird waits for a rider on a street of downtown Washingt...
An electric scooter belonging to the startup Bird waits for a rider on a street of downtown Washington, DC
Eric BARADAT, AFP
The coming tariffs, announced on August 7, are round-two of the taxes that the US has imposed on Chinese goods. Going into effect on August 23, a 25 percent tariff on $16 billion in Chinese goods will undoubtedly bring the simmering trade war with China to a boil.
On the proposed list of affected goods, hidden between special purpose motor vehicles and refrigerated vessels, is HTS code 8711.60.00, described as “Motorcycles (incl. mopeds) and cycles, w/electric motor for propulsion.” In other words, electric bicycles and scooters.
E-scooters already have a lot to deal with
The electric scooter craze has taken hold of cities around the world, and since coming to San Francisco last March, the scooters have literally swarmed across the United States, popping up in over 20 cities, from Miami, Florida to Salt Lake City, Utah.
File photo: Segway scooter.
File photo: Segway scooter.
Ferienagentur (CC BY-SA 3.0)
The scooters are dockless and are touted as a way to be more environmentally friendly, and ease gridlock while letting riders zip through streets. “Ride your way,” the San Francisco-based Spin promises. Even Uber and Lyft got into the growing market.
And here is where things began to get a bit sticky. The competition grew to the point that instead of asking cities if they would like to try out this revolutionary way of getting about crowded downtown streets - they began dumping the scooters on the unsuspecting cities.
One of the most recent dumps happened in Richmond, Virginia, where Segway has been used for a number of years. On Thursday last week, Santa Monica, California-based Bird dropped a batch of its vehicles in the city in a blitz that quickly resulted in riders zipping around town.
By Thursday afternoon, according to Richmond BizSense, all the scooters had been impounded. Tom Byrnes, a spokesman for the mayor’s office, confirmed that the city was collecting and impounding the scooters, saying that Bird did not have the permissions needed to drop their fleet in the city. “They deployed them without engaging the city. We had no contact with them,” Byrnes said.
Scooter vs. car on Toronto s Queen Street East Tuesday during the lunch hour backed up traffic.
Scooter vs. car on Toronto's Queen Street East Tuesday during the lunch hour backed up traffic.
No regulation nationwide
Scooter companies have started a pattern - dump the scooters, watch the demand for them rise, and then sit back and wait for a city to give-in. But cities are starting to fight back.
Just as Richmond has done, other cities are issuing cease and desist orders, coupled with city-wide bans, and a torrent of criticism from local governments and citizen groups. But even with this latest problem within the country, it is still the tariffs that may be the scooter's undoing.
Over the last six months, according to PIERS import data, China imported into the U.S. almost $61 million worth of goods under the e-scooter description. A 25 percent tariff would have raised costs for scooter importers by over $15 million.
More about electric scooters, Trump Tariffs, US startups, Bird, Business