AKRON (Dec. 10, 2014) — The silence coming from the Rubber Manufacturers Association (RMA) and the Tire Industry Association (TIA) on the decision by the U.S. Commerce Department to impose countervailing duties on consumer tires imported into the U.S. from China speaks volumes about what this action means to the U.S. tire industry.
Their choosing not to comment signifies how difficult it is to take a position on this controversial issue, although TIA did say in June that it opposed the U.S. Commerce Department's decision to investigate the situation. How and whether the duties impact a company depends on where it is coming from.
Importers and manufacturers of Chinese passenger and light truck tires are decrying the move as unfair and in conflict with those who believe in open and free market places.
Many tire dealers, too, are unhappy as it means they may lose a source of supply or, at the very least, face a disruption in fill rates—especially for entry-level products.
Consumers also are liable to be upset as the cost of tires is expected to rise as the supply of less-expensive entry-level products from China tightens, thus pushing all tire prices higher.
Yet others, including some domestic tire manufacturers, distributors and large tire dealership chains, see opportunity coming from the expected cutback in Chinese passenger and light truck tire imports.
Speaking about the specter of new duties on China-made consumer tires earlier this year, Monro Muffler Inc. President John Van Heel said, “…if additional tariffs are implemented, we believe that our comps get better, our earnings get better and smaller tire dealers would find themselves under additional pressure, which would create more opportunities for us to make accretive acquisitions.
“In short: Bring it on!”
Further muddling this issue is whether Commerce will decide to impose additional anti-dumping duties on Chinese consumer tire imports.
The agency expects to provide a preliminary determination on this by Jan. 21.
What's known so far is that on Dec. 1, importers of passenger and light truck tires from China were required to start paying the newly determined countervailing duties amounting to 15.69 percent for all but three companies, which is being applied retroactively 90 days from that date. This is on top of the existing 4-percent tariff.
Until the Commerce Department decides on the anti-dumping duties question, the U.S. consumer replacement tire industry will continue to be in flux.
Today, Chinese consumer tires make up more than 20 percent of the U.S. replacement market and, in many cases, serve as the entry-level product offerings for many dealers and distributors.
Whether that remains the case will be decided once all of the Commerce Department's actions are known.
This editorial appears in the Dec. 8 print edition of Tire Business. Have an opinion about it? Send your comments or letter to the editor to [email protected].