TB EDITORIAL: ITC faces tough tariff questions

AKRON (June 9, 2014) — Here go again. The United Steelworkers (USW) union is petitioning the International Trade Commission (ITC) for the second time in five years to take up the issue of Chinese-made passenger and light truck tire imports and their impact on the U.S. tire industry.

The union is convinced the Chinese government is subsidizing the country's tire makers, which indirectly is jeopardizing tire manufacturing jobs in the U.S. Therefore it is seeking relief in the form of antidumping and countervailing duties.

The union said it has uncovered 41 different subsidy programs available to Chinese tire makers, including numerous export subsidies.

There is no question passenger and light truck tire imports from China have surged since the three years of elevated tariffs ended in September 2012. Statistics presented by the USW petition show that imports of passenger and light truck tires from China grew to 50.8 million tires in 2013 from 24.6 million in 2011.

What also occurred during this period is that overall tire imports into the U.S. continued to grow, just not those from China.

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According to a Tire Business analysis of tire import and U.S. shipment data, imported tires today represent more than 70 percent of the overall U.S. passenger and light truck tire replacement market. The Chinese share alone is 23 percent. That's right—nearly every fourth tire sold these days is made in China.

Granted, a measurable portion of these are captive imports — that is, tires brought in by manufacturers with tire plants in the U.S. and/or by U.S. private brand companies that source their tires from China. The latter is business that U.S. manufacturers for the most part abdicated in recent years due to low profit margins.

The question for the ITC — one it also had to address the last time it faced this issue — is whether the U.S. tire manufacturing industry is being harmed by the surge in consumer tire imports from China.

This is not an easy answer, as the tire industry is a global business and importing and exporting of tires among countries is common practice. Placing a high tariff on one country opens the door for product from other countries with lower tariffs to take its place. That's what happened during the 2009-2012 period of elevated Chinese tariffs.

The ITC also must take into consideration whether the tire industry is being harmed if new tire manufacturing jobs are created in plants that are non union. Tire makers have announced nearly $4 billion in capital investments in U.S. tire plants over the past several years, but the majority of the thousands of jobs created in those plants are non-union.

And, what about the impact such tariffs have on American consumers? Many observers believe that all the first round of higher tariffs did was drive tire prices higher, hurting consumers.

The ITC must weigh all of these issues carefully as it once again reviews the impact of imported Chinese consumer tires on the U.S. market.

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This editorial appears in the June 9 print edition of Tire Business. Have an opinion on it? Send your comments to [email protected].

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