Despite Uncertainty,Mexican Bicycle Manufacturers Continue to Focus on the U.S.Market

　　Mercurio Sports Group's Investment in Local Assembly Plant

　　Mercurio Sports Group,a Mexican bicycle manufacturer and distributor,invested $25 million to establish an assembly plant in Mexico in 2019,covering 540,000 square feet.The plant was designed to simultaneously supply both the U.S.and Mexican markets,with plans to gradually expand its frame manufacturing capabilities.

　　Shift in Focus to Domestic Market

　　Although the company initially hoped that the Trump administration’s tariffs on Chinese bicycles would encourage the U.S.industry to view Mexico as an alternative supply chain,the factory now mainly serves the domestic market after the bicycle consumption boom during the pandemic.Despite assembling complete bicycles for U.S.brand Yuba,with frames sourced from another Mexican plant,the factory still heavily relies on the Asian(including Chinese)supply chain for key components.

　　Concerns Over Tariff Uncertainty

　　Facing the Mexican government's recent proposal to impose a 25% tariff on imported goods,Group President Javier Noyola expressed concerns about the future of expanding into the U.S.market.“The most difficult issue is the policy uncertainty;the rules of the game are still unclear.”In early March,he made these remarks while Trump announced,via social media,a second 30-day delay on the 25% tariff on Mexican goods.

　　Challenges in U.S.Tariff Structure

　　According to U.S.trade rules,the country of origin for bicycles is determined by the frame.This means that even if assembled in Mexico,bicycles using Chinese-made frames will still be subject to tariffs of up to 56% when entering the U.S.However,under the United States-Mexico-Canada Agreement(USMCA),if more than 60% of the components of a bicycle are made in Mexico,it is exempt from tariffs.Despite this,the Trump administration repeatedly imposed tariffs on Mexico and Canada,with the final rate set at 25%,which is still 31 percentage points lower than the tariffs on Chinese bicycles.

　　Mexico's Growing Demand for Mid-to-High-End Bicycles

　　Notably,this year the factory will begin assembling electric bicycles equipped with Shimano motors.Noyola pointed out that demand for mid-to-high-end bicycles is continuing to grow in Mexico.Although the commuter sector is still dominated by Chinese-made gasoline motorcycles,the emerging middle class’s interest in leisure cycling and electric bicycles is being stimulated by their growing disposable income.

　　Mexico's Tariff Policies Favor Local Assembly

　　Compared to the U.S.,Mexico imposes a 35% tariff on imported bicycles and components.However,it offers exemptions for locally assembled bicycles that use Chinese-made frames and parts.This policy difference allows brands like Cannondale to maintain a price advantage in the Mexican market.By adopting local assembly strategies,Mercurio is able to avoid the high tariffs on imported complete bicycles while remaining flexible in responding to policy fluctuations in the U.S.market.