US tariffs on China consumer tyres expire. What's next?

ERJ staff report (TB)

Washington DC - The US 's three-year run of elevated tariffs on Chinese passenger and light truck tyres expired at midnight Sept. 26 without further action by the Obama administration, a change that is bound to spur a rebound in imports from China, observers said.

Annualized passenger tyre imports from China fell to roughly 22 million units last year from 39,6 million in 2008, the last full year before the tariffs, according to US Department of Commerce figures.

Overall imports, though, were higher last year than in 2009 or 2008, the data show. During 2009 and 2010, the average declared value of a Chinese passenger tyre stood relatively pat at below $31; it jumped to $36.74 last year.

Through the first half of 2012, car tyre imports from China were up 8.8 percent over 2011 to more than 12.8 million units, or 20 percent of all tyres imported, according to available trade data.

Separately, a report on the China Rubber Industry Association website indicated tyre makers in Shandong Province were gearing up to supply the expected demand from the US for their products.

The Tire Industry Association (TIA), which opposed the tariffs from the beginning, reiterated today its longtime position that the tariffs did not help American workers. In a statement, TIA Executive Vice President Roy Littlefield pointed out distributors shifted their buying of lower-cost tyres to other nations after the tariffs were imposed.

TIA's position runs counter to that of the Obama administration - which has touted the tariffs in a TV advertisement for President Obama's re-election - and the United Steelworkers union, which petitioned for relief against Chinese tyre imports in April 2009 under Section 421 of the Trade Act.

"Since (Obama's) decision, by every measure, success has been achieved," said Leo W. Gerard, USW International president, regarding the tariffs.

The tariffs amounted to 39 percent the first year, 34 percent the second and 29 percent the third. As of midnight Sept. 26, they reverted to their previous level of 4 percent.

Industry analysts generally agree with TIA regarding the effect of the tariffs. In a Sept. 26 report, BB&T Capital Markets quoted general industry and Obama administration feedback as indicating that the tariffs saved an estimated 1,000-1,200 US tyre manufacturing jobs, but at a total cost to American consumers of approximately $1 billion.

BB&T also estimated that the tariffs added 10 to 15 percent to the price of tyres in the US.

"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.

From Tire Business (A Crain publication)