On June 28, the Department of Commerce issued a preliminary determination in its countervailing duty (CVD) investigation of truck and bus tires from China.
The DOC’s preliminary determination assigned CVD rates ranging from 17.06 to 23.38% to counteract a tire exporters artificially low prices that result from government subsidies. These duties would be added to any anti-dumping duties the DOC may assign in its upcoming preliminary determination on Aug. 26.
Those directly affected by the ruling include Double Coin Holdings Ltd., which produces tires for China Manufacturers Alliance (CMA) in the U.S., with a CVD rate of 17.06%, and Guizhou Tyre Co. with a CVD rate of 23.38%. All other Chinese tire producers were issued rates of 20.22%.
Additionally, Guizhou Tyre was found to be in violation of critical circumstance and must pay duties on any imports to the U.S. going back 90 days from the determination. Critical circumstance prohibits shipping at a frenzied rate following a filed complaint. The DOC found Double Coin did not violate critical circumstance.
Several tiremakers shared their views on the initial ruling with Tire Review.
Receiving the lowest rate, Double Coin and CMA said there was no way to determine or have any expectations on the duties they would receive with the political nature of countervailing and antidumping duties.
“This whole process is very complicated and it is a long, drawn out process. You really need to take these two things together and view them as one issue because it’s obviously going to affect the pricing in the market place,” Double Coin and CMA told Tire Review.
“What this CVD does confirm is it’s obvious that in (the DOC’s) view, when it comes to export subsidies to the U.S., or any export market, Double Coin they say was participating. We have a different opinion obviously… The fact that we received the lowest countervailing duty by a fairly wide margin, it’s confirmation that in their eyes Double Coin is not receiving subsidies to the degree that the other companies were,” the tiremaker adds.
Cooper Tire & Rubber Co., which is in the process of acquiring majority share in China-based TBR tire company Qingdao Ge Rui Da Rubber Co. (GTR), could also be impacted by these duties.
“We will assess the preliminary CVD announced today with the goal of keeping Cooper and our customers competitive. We are committed to the TBR business and will continue to produce high quality tires that provide great value to customers. We have announced that we are also actively looking worldwide at additional TBR capacity, including outside of China, but we have no specific plans to communicate today,” Cooper said.
According to industry insiders, it is also possible that not all CVD subsidies were reviewed prior to the preliminary determination and this duty could go higher at the final determination. The final CVD determination is set for on or around Nov. 10, 2016.
The intended affect of these duties is to stop advantages exporters may have from subsidies, thus leveling the playing field. When the United Steelworkers union filed the initial petition in January, Leo W. Gerard, USW International president, stated the intent of the petition was to “stop the unfair trade practices of China from damaging our members’ good jobs and the U.S. manufacturing base.”