Chinese tyre tariffs poised to expire

ERJ staff report (R&PN)

Washington DC -- With the Obama administration's tariffs against Chinese passenger and light truck tyres scheduled to expire at midnight last night, the word on the street is that President Obama will make no last-minute move to renew them.

The Associated Press has reported that the tariffs-instituted in September 2009 in response to a petition from the United Steelworkers union-would lapse as scheduled.

The tariffs amounted to 39 percent the first year, 34 percent the second year and 29 percent the third year. As of midnight, they were scheduled to return to the traditional rate of 4 percent.

In a statement earlier this week, the USW affirmed it would not request an extension of the tariffs. It decided not to ask for an extension after it learned that the US might have to pay reparations to China, said Leo W. Gerard, USW International president.

The effects of the tariffs have long been disputed by the different sides in the debate. The USW and the Obama administration claim the tariffs rejuvenated domestic tyre production and put U.S. tire manufacturing workers back to work.

Tire retailers and distributors, however, claim the tariffs only created shortages on the lower end of the tyre market, redistributed tyre imports to other countries and cost jobs in tyre stores and warehouses.

BB&T Capital Markets issued a report Sept. 26 saying the tariffs increased tyre prices by 10 to 15 percent over the three-year period.

“General industry feedback and political claims from the Obama administration would place the job savings from the program at roughly 1,000 to 1,200, while the incremental cost to the US consumers has been estimated at roughly $1 billion,” BB&T said.

“Notably, we believe the largest beneficiaries of the Chinese tyre tariff were Korean manufacturers who generally filled the gap in lower price product imports,” it said.

The AP quoted analysts as saying some tyre makers may cut prices once the tariffs have lapsed.

Officials of USTR could not be reached for comment.

From Rubber & Plastics News (A Crain publication)