AKRON (Aug. 17, 2015) — It's beginning to seem like a whole lot of “déjà vu all over again.”
We're referring to the market dynamics developing in the wake of the U.S. government's imposition of import duties on passenger and light truck tires from China that took effect officially on Aug. 10.
In a development eerily reminiscent of 2009-11 — when the U.S. imposed a three-year regimen of elevated tariffs on Chinese tires — we're seeing the number of Chinese-sourced consumer tires shipped to the U.S. falling, which is what the petitioner in this case, the United Steelworkers (USW) union, envisioned.
And just like in 2009-11, the void created by the missing Chinese imports — 12 million units so far in 2015 — is being filled seemlessly by tires from South Korea, Thailand, Indonesia, Taiwan, Malaysia, Vietnam, etc., etc. Meanwhile, Canada and Mexico are stepping up their exports as well.
This shift in sourcing is not what the USW envisioned.
The union maintains that blocking or slow¬ing the flow of Chinese-sourced tires should encourage U.S. tire makers to step in and fill the void.
Instead, what just about everyone else in the tire universe had predicted is coming true: Namely, other offshore sources of consumer tires are more than willing and eager to step in.
It's still a bit too early to tell what will happen to pricing, but nearly everyone who testified in Congressional hearings on the matter was of the same mind — it'll be the consumer who will face the spectre of rising tire prices that are coming from more expensive sources.
That's not to say, though, that the import situation's not going to change.
In the next couple of years, there'll be three new tire plants in the U.S. coming on stream, being built by GITI Tire Group of Singapore/China and Hankook Tire Co. Inc. and Kumho Tire Co. Ltd. of South Korea, with combined capacities of roughly 13 million to 14 million units a year. While these factories aren't expected to produce tires in the lower-priced tiers that prompted the duties action, volume is volume and that's a lot of it.
So while the USW likely will see Chinese imports curtailed and new U.S. jobs created, it won't benefit directly. The three new plants, plus Continental Tire the Americas L.L.C.'s two-year-old factory in South Carolina, are in states that aren't particularly union-friendly.
This editorial appears in the Aug. 17 print edition of Tire Business. Have an opinion on it? Send your comments or a letter to the editor to [email protected].