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Tiremakers React to Tariffs

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The Commerce Department announced its preliminary countervailing duties on consumer tires produced in China and exported to the U.S. on Nov. 24. The 15.69% duty level, which will be reviewed again before it is set in concrete in early April 2015, will be retroactive for a 90-day period from the official publication of the new duty in the Federal Register, which is expected to occur next week.

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Separate and unique countervailing duties were set for Cooper Kunshan China Tire Co. Ltd. (12.5%), Giti Tire Fujian Co. Ltd. (17.69%) and Shandong Yongsheng Rubber Group Co. Ltd. (81.29%).tariff

Still to come is the other shoe, a determination of anti-dumping duties, which is due Jan. 21, 2015. Both duties will impact all brands of tires exported to the U.S., regardless of manufacturer.

Already several tiremakers are reacting to the proposed tariffs.

Giti, which recently announced plans to build a manufacturing facility in South Carolina, plans to seek further clarification from the Commerce Department.

“Giti Tire is very disappointed with the Department’s preliminary determination,” said a representative from Giti. “Giti is a private company which believes in free-market practices and competes fairly in the global tire arena. The company’s success is attributed to free trade and fair competition as demonstrated by its successful sales in more than 100 countries in a highly competitive global tire industry. Giti believes that these preliminary duties do not reflect its actual circumstance. The company is seeking clarification from the Department on its calculation and will continue to work with the Department between now and the issuance of the final determination to ensure that Giti Tire’s actual circumstance is properly reflected in the Department’s calculation.”
Sentury Tire Americas said the tariffs haven’t dampened its commitment to its U.S. distributors and dealers.

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“While we are disappointed with this decision, Sentury Tire is committed to delivering high quality tires at an affordable price,” said Maxwell Wee, director of sales for Sentury Tire Americas. “We are moving ahead with our new expanded Miami, Florida warehouse and office complex in January 2015 and will be unveiling new programs and products to support our Delinte and Landsail brands, including the introduction of some exciting new All-Terrain and Mud-Terrain tires.”

Horizon Tire said it had been anticipating the recent tariff decision and has been working on additional tire sourcing activities. The tiremaker will produce its brand Crosswind via the Linglong factory in Thailand, it said. The tiremaker noted that the duties do not mean that Chinese-made products won’t prove to be viable products within the U.S.

“As the U.S. market adjusts pricing to include all tire factories located worldwide to as well as in the U.S. over the coming months that the slotting pricing levels will ultimately revert back to tier levels 1, 2 and 3 (good-better-best) as existed pre-tariff,” Horizon said.

Horizon said it’s confident that its sales won’t decrease. Rather, they may be stronger due to the tariff.

“Our sales will increase via the tariff proving to be an advantage for us due to the many brokers and distributors that will experience unrecoverable negative impact because of lack of supply resources, inability to post the upcoming bonds that the U.S. government will require as insurance in receiving the mandated tariffs due,” the company said.

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The tiremakers agree that the tariffs hurt consumers.

“Unfortunately we feel this action penalizes tire customers who have come to depend on our competitively priced tires that meet all applicable Federal Motor Vehicle Safety Standards,” said Sentury’s Wee.

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