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Technology'Whipsaw' of U.S.-China trade war will force small businesses to close, bike start-up CEO says

19:40  09 september  2019
19:40  09 september  2019 Source:   cnbc.com

China calls US 'school bully' as trade war escalates

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Small businesses are feeling the effects of the U . S .- China trade war , and some may close because of it, the founder of a bike start - up says . "We've really had to be a lot more conservative with our hiring plan," says Brian Riley of Guardian Bikes . Tariffs on bikes have increased from 11% last September

Small businesses are feeling the effects of the U . S .- China trade war , and some may close because of it, the founder of a bike start - up told Brian Riley, co-founder of Guardian Bikes , said on “ Closing Bell” that his company will likely be able to overcome its impacts because it has stronger pricing power

'Whipsaw' of U.S.-China trade war will force small businesses to close, bike start-up CEO says © Provided by CNBC LLC Guardian Bikes CEO Brian Riley on Shark Tank

Small businesses are feeling the effects of the U.S.-China trade war, and some may close because of it, the founder of a bike start-up told CNBC on Friday.

Brian Riley, co-founder of Guardian Bikes, said on "Closing Bell" that his company will likely be able to overcome its impacts because it has stronger pricing power but not every small business will be as fortunate.

"As somebody that knows what it's like to run a small business, there are plenty of small businesses that won't have as much pricing power and be left out of business living through the whipsaw of these tariffs," said Riley, whose company received an investment on "Shark Tank."

The US-China trade war is helping drive the massive fires burning the Amazon rainforest

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The ongoing trade war between the United States and China has put many of America' s small business owners on edge. Over the last three decades, Sharon Evans, CEO of CFJ Manufacturing, has grown her business from a small jewelry store to a 120-employee promotional products company.

President Donald Trump' s statement on China ' s plan for a national security law in Hong Kong on Thursday raised concerns over Washington and "It' s a bit of a push-pull as there' s some positive news from a healthcare perspective at least, but then we also have the rhetoric ramping up with

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The company had been paying a steady 11% tariff on its bikes until September 2018, Riley wrote last month in a Medium post. It increased 10% that month before a 25% uptick in May 2019.

Starting Oct. 1, when President Donald Trump plans to increase the current 25% tariffs by 5%, Guardian will be paying 41% tariffs, Riley wrote at the time.

Guardian has raised its prices by 10% as a result of the tariffs, while it has absorbed the remainder of the increased costs, Riley said.

The result has been less hiring and less investment in innovation, Riley said.

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Many businesses are struggling with uncertainty, while waiting for the world' s two biggest economies to finalize a trade agreement. Yahoo FInance’ s Akiko Fujita discusses the impact with Genco Shipping CEO John Wobensmith. U . S . markets close in 4 hours 16 minutes.

Fears of a renewed trade war cut short Wall Street' s April rally that was powered by optimism. President Donald Trump' s statement on China ' s plan for a national security law in Hong Kong on Thursday raised concerns over Washington and Beijing possibly reneging on their Phase-1 trade deal.

"In any fast-growing business, the biggest challenge is planning, and cash-flow planning, and the biggest input to that cash-flow planning is your inventory and product costs," explained Riley, who said Guardian is growing by 300% year to year.

"We've really had to be a lot more conservative with our hiring plans and with the amount of money we're putting into things like innovation and marketing and growth ... to make sure we have enough cash on the balance sheet to absorb any of these increases that may or may not happen," Riley said.

Based in Irvine, California, Guardian sells bikes for children with a distinct braking system called SureStop, which it says increases safety.

The U.S. and China have agreed to meet in Washington in early October for the next round of negotiations in the long-running trade war, which intensified on Sunday when the latest rounds of tariffs when into effect.

quick-change artist: Convercycle: from city bike to long cargo bike with one handle

 quick-change artist: Convercycle: from city bike to long cargo bike with one handle © PR / Convercycle The folding rear triangle was painted white for better visualization- The Convercycle is a quick-change artist, the long cargo bike can be easily folded to normal size. Do the lions support the concept with money and their contacts? The bike is faster than the car at distances of up to five kilometers, and the distances in the city can be even longer. But as soon as you want to transport more than one bag, a normal bike quickly reaches its limits.

"It is starting to look like a U . S .- China summer of discontent in the making," said Stephen Innes, chief global market strategist at AxiCorp. Hong Kong activists called on Friday for people to rise up against Beijing' s plans although a proposed midday march in the central financial district did not materialise.

Small Business . The Trump administration and the Chinese government restart trade talks Monday as they scramble to strike a new deal before a March 2 deadline. Here is a timeline of the U . S .- China trade conflict during the Trump era that led up to the talks, and the products the tariffs have affected

The U.S. placed 15% levies on apparel, footwear, consumer electronics and toys. Additional tariffs on products such as smartphones and laptops are set to go into place Dec. 15. Those two rounds of tariffs would collectively affect about $300 billion worth of Chinese imports.

As he has ratcheted up tariffs, Trump has urged American companies with operations in China to leave the country. Some companies have done that, relocating to Vietnam or Thailand, for example.

Other businesses have said it is hard to pack up and move due to supply chain concentration. The bike industry illustrates that challenge, Riley said.

Riley said 94% of bikes sold in the U.S. are made in China. Guardian relies on 40 different companies to supply the 65 parts it needs for its bikes, he said.

"Moving to another country just isn't really an option for us and most people in the bike industry right now simply because it takes a coordinated move of that whole supply chain to move to a different production base, which is going to take years and millions of dollars of investment," Riley said.

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."

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'Whipsaw' of U.S.-China trade war will force small businesses to close, bike start-up CEO says

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