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What Armes Really Said About Tariff Threat

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CooperDuring Cooper Tire & Rubber Co.’s earning call with investment analysts on Aug. 7, Cooper chairman and CEO Roy Armes briefly addressed the USW petition for added tariffs on China-made consumer tires imported into the U.S. Cooper is a major importer of those specific tires, and was dinged during the three-year added tariff imposed by the Obama Administration between 2010-12.

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Speaking to analysts on the call, Armes said: “Now moving on, many of you are aware that in early June, the United Steelworkers filed antidumping and countervailing duty petitions against certain passenger vehicle and light truck tires from China with the U.S. International Trade Commission and the United State Department of Commerce. The ITC made an affirmative preliminary determination about two weeks ago, which means that the case is now at the Department of Commerce for further investigation and determination of whether or not there is dumping and/or illegal subsidies.

“We don’t know what the outcome of this is going to be, but based on our past experience we know that tariffs have been disruptive to a normal market and if they’re imposed again, they are likely to be disruptive again. Tariffs are felt in the marketplace where they are being applied, but they also often affect other markets. We continue to support free and fair trade in a globally competitive market.”

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Later in the call, Armes was asked about what Cooper’s response would be in the event another potentially higher-value tariff was instituted.

“Yes, I would start just putting it in the context, we still support free and fair trade and secondly we are not sure what’s going to happen or what the potential outcome is going to be here. But we are going to continue to monitor this and adjust as necessary.

“The third thing I would say is we have been moving and shifting our mix to a higher-end product. An example would be broadline and base-rated categories where we have been more exposed in the past, we are now 25% or 30% less exposed today than we were before. So we are shifting our mix to a move away from the lower end. In any case, any event such as these tariffs, they do have a disruptive effect on the market, at least initially, until adjustments can be made in the business and I guess we are just going to have see at this point in time. But if you look at what happened with the 421 tariffs, yes, there were some pricing issues because of the demand of more the domestic products. At the same time we saw other countries enter into the market and pick up a lot of slack on these imports because during that period of time of the tariffs, imports continued to increase. They came from other countries. So I think we are going to have to step back and monitor this and look at it and see what makes sense for us overall.”

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