ERJ staff report (R&PN)
Akron, Ohio -- The impact of two years of restrictive tariffs on Chinese-made passenger tyres is in the eye of the beholder.
As the third year of duties begins-now down to 29 percent of a tyres' value, and reverting to the typical 4 percent in a year-and as the World Trade Organisation yet again upheld the validity of the tariffs, there are differing views if the duties worked or not.
If you are a United Steelworkers union member or advocate, the imposition of the duties-39 and 34 percent, respectively, in the first two years-slammed the door in the US on imports of auto and light truck tyres made in China. It was a big victory for the union, at least on paper.
The Obama administration had no choice but to support the union complaint and install the high duties. Whether the issue had merit or not, unions are among the Democrats' staunchest supporters, and the president wasn't about to throw them under the bus. His predecessor, President George W. Bush, did the same thing, only on the opposite side of the political spectrum, refusing to stop imports.
If you were an employee of GPX International Tire Inc., you wouldn't be too hot on the ruling. It effectively killed the company, a heavy importer of Chinese-made tyres.
Now if you work for a tyre maker located in other low-cost Asian countries, the tariffs were a blessing. Statistics show these nations essentially stepped in and replaced the Chinese tyres-same situation, cheaper, Asian-made tyres just from different countries.
Meanwhile, if you were an executive of a Chinese tyre manufacturer that exported such products to the US, you had to find other markets to ship tyres to. And they pretty much did. Japanese tyre makers that had capacity in China did some production shifting, too.
If you go by just the facts and skip the hyperbole of some of the players, the real truth of the duties is quite evident: Too late for US tyre workers, in the end more of a public relations gambit than a game-changer.
Low-end, general-purpose passenger tyre production in the US? Sorry folks, it's pretty much gone and not coming back. A new wave of Chinese-made tyre imports-that's a strong possibility starting in a year's time.
From Rubber & Plastics News (A Crain publication)