The Tire Retread & Repair Information Bureau testified in favor of tariffs on Chinese tires and retreads at a federal hearing at the U.S. International Trade Commission.
The Section 301 Committee of the Office of the US Trade Representative (USTR) is holding hearings at the U.S. International Trade Commission for interested parties to comment on proposed duties on certain Chinese products.
On August 20, TRIB Managing Director David Steven testified before the Section 301 Committee of the Office of the U.S. Trade Representative (USTR) on the impacts that low-cost, low-quality Chinese truck and bus tires are having on the retread industry in the U.S. His testimony follows below.
“Testimony of David Stevens
August 20, 2018
“As Managing Director of the Tire Retread & Repair Information Bureau, I’m here today to represent the thousands of US-based employees of small to medium sized businesses that are either directly or indirectly involved in the tire repair and retreading industries. I am commenting today specifically on the tariff subheadings related to new and retreaded tires for trucks and buses (4011.20.10, 4011.20.50, 4012.12.40, 4012.12.80).
“In the US, the commercial truck retread industry grew rapidly during World War II to support the war effort and is now a $3 billion industry which directly supports more than 51,000 jobs in the US. Retreading has continued to play in important role in the trucking industry by delivering safe, reliable, and high-performing tires that help trucking fleets keep their operating costs low. At the same time, retreading also delivers massive environmental benefits by saving scarce natural resources, reducing carbon emissions, and preventing tires from being dumped in landfill and becoming breeding grounds for disease-carrying insects.
“However, this industry and its US employees are under severe threat from low-cost, low-quality truck tires being imported from China. Every other type of tire being imported from China into the US faces some type of duty, whether passenger, agricultural, or large off-the-road tires. In fact, the International Trade Commission looked at the issue of commercial truck tires coming from China and recommendedanti-dumpingg duties as high as 22.57% and countervailing duties as high as 65.46%. At the final vote, one commissioner recused himself from voting allowing the recommended duties to not be implemented. This decision is currently being appealed to the Court of International Trade. Multiple other countries around the world have already implemented tariffs on Chinese truck and bus tires being imported into their countries and the European Commission has recently recommended countervailing duties as high as 82 Euros per commercial truck and bus tire.
“Historically, retreading has always represented 50% of the commercial truck tire replacement market in the US. Since 2013, the compound annual growth rate of the commercial truck tire replacement market has been 5.4% while the retread industry has declined by 2.1%. This means that in 2017, retreading only represents 42% of the truck tire replacement market and implies a loss of 2.45 million retreaded truck tire units. This decline in the retread industry is completely driven by low-cost, low-quality Chinese truck tire imports. Retread manufacturers and supporting industries have had to lay-off employees, reduce hours, and close their businesses in the face of this unfair competition.
“I say unfair competition and my assertion is backed up by price points here in the US and in China. For example, let’s look at pricing for the most popular truck tire size in the US: 11R22.5. The average sales price of that tire produced by US tire manufacturers across multiple quality tiers is $231. The cost of production for that tire (material and variable labor costs only) is $135. US retailers can buy that same size tire from Chinese manufacturers for $125 and then sell them for $170. That same tire sold by Chinese manufacturers in their own country is sold for between $180 and $220 per tire. This impacts the retread industry because the cost savings for a retreaded tire compared to a new tire have historically been around 40-50% less than the cost of a quality new tire. With the price point of these low-cost, low-quality Chinese tires getting closer to the price of retreaded tires, many customers are looking only at price, instead of total cost of ownership, and choosing to buy the Chinese tires. However, these low-cost, low-quality tires will not last as long nor will many of their casings be retreadable. So, the tires will need to be replaced sooner and there is no residual value in the tire casing as many are not high enough quality to be retreaded. Large trucking fleets are continually testing their tire products and they have consistently found that a combination of quality new tires and retreaded tires provides the lowest cost-per-mile for their businesses. This is why 100% of the 100 largest trucking fleets in the US use retreaded tires in their operations and time-sensitive operations such as UPS, FedEx, and the US Postal Service continue to utilize retreaded tires. As a testament to the quality of retreaded tires and their importance to the trucking industry, some larger fleets and truck stops have partnered with manufacturers to open their own retread plants. Future investments like these will be at risk without protection from low-cost, low-quality Chinese tires.
“I don’t have the time at this hearing to fully explain or rebut some of the misconceptions about tire retreading, but let me assure you that multiple State and Federal studies have looked into the safety, reliability, and performance of retreaded tires. Each of these studies has reached the same conclusion: retreaded tires do not cause rubber on the roads, retreaded tires are safe and reliable products that go through rigorous testing and manufacturing processes, and retreaded tires should be used in more applications to drive economic and environmental savings. Quality new tire manufacturers are designing their truck tires to be retreaded multiple times and are providing warranties for their customers that guarantee multiple retreads from their products. These low-cost, low-quality tires from China cannot be retreaded and will start to create problems in the tire recycling industries as well as creating local problems with illegal tire dumping and tire piles in landfill.
“I implore you to protect the thousands of hardworking men and women in these small to medium-sized businesses spread throughout the US from unfair competition and pricing by low-cost, low-quality Chinese tire manufacturers and putting in place tariffs that meet the recommendations of the ITC study of between 23% and 65%. Thank you for your time and consideration.
Tire Retread & Repair Information Bureau (TRIB)
TRIB Testifies at US International Trade Commission.”
For more information, reach out to TRIB at retread.org.