Industry Mixed on Recent Chinese Tire Tariffs

Industry Mixed on Recent Chinese Tire Tariffs

As a whole, the tire industry remains mixed in its reaction to the most recent round of tariffs imposed on Chinese imports, which includes Chinese tires and tire-related materials.

The White House and the U.S. Trade Representative (USTR) announced they have finalized tariffs on $200 billion worth of Chinese imports, which includes tires and tire-related materials.

The additional 10% tariff went into effect starting Sept. 24 and will increase to 25% by the start of 2019, according to a statement from the USTR. New passenger, truck and bus radials are on the list as well as ag, construction and mining tires and their retread equivalents. Tire-related materials, including tire cord fabric of various materials and rubber innertubes, also made the list.

As a whole, the tire industry remains mixed in their reaction to this most recent round of tariffs. Roy Littlefield III, executive director of the Tire Industry Association, explained that that TIA is split on the issue. Many of its commercial tire dealer members are against the tariff because they can make a profit selling Chinese tires. But its members who are retreaders support it because it means there’s an added cost to importing low-cost, foreign products that compete with retreading.

When asked how their members are reacting to the tariffs, the U.S. Tire Manufacturers Association (USTMA) also took a neutral stance.

“Tire manufacturing is vital to the U.S. economy. Tires manufactured by our members safely transport millions of Americans and American goods each day. We advocate for free and fair trade affecting the importation of raw materials, equipment and other products necessary for domestic tire manufacturing,” USTMA said in a statement. “USTMA opposes trade policies that limit the availability or increase the cost of raw materials and capital equipment as they threaten the competitiveness of U.S. tire manufacturing.”

David Stevens, managing director for the Tire Retread and Repair Information Bureau (TRIB), said the organization believes that the tariffs will help domestic retreaders by weeding out low-cost, low-quality Tier 4 retreads coming out of China, especially when the tariff hits 25% by next year.

“Tier 4 tires are being sold below raw materials cost. That’s taking sales away from the from the retread industry,” Stevens said. “Unfortunately tariffs are a very blunt instrument… but these are low-quality, low cost-tires, and they’re disproportionately hurting us in the retread industry…. We want all truck tires sold in the U.S. to be a high enough quality where they can be retreaded.”

Walt Weller, senior vice president for the China Manufacturers Alliance, said Chinese tires fill the overall demand for truck tires in the U.S., and the tariff will hurt quality tires exported from China. He believes the tariff will impact the “bottom feeders” of Chinese tire manufacturers because they won’t be able to financially handle the tariff.

“They either won’t be able to handle dealing with the tariff or demand for their products will evaporate because their only attraction is low price,” he says about certain Chinese manufacturers. “With this (the tariff), their price will be a lot closer to other products in the marketplace…. But if you have good products and are well-represented in the U.S. market, those folks will do fine.”

And a handful of those companies are. Giti Tire USA and Triangle Tire USA have and are building factories in South Carolina, while Sentury Tire and Kumho Tire USA, now under majority ownership by Chinese giant Qingdao Doublestar, have factories in Georgia. A U.S. manufacturing presence allows Chinese companies to avoid tariffs on at least some of their products if they’re manufacturing in the U.S.

Littlefield said TIA does back the Auto Care Association’s stance on opposing tariffs on auto parts imports. Last month, the association asked the USTR to adopt a process for its members and stakeholders in the auto industry to request products to be excluded from the latest round
of Section 301 tariffs on Chinese imports.

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