When the U.S. International Trade Commission enacted elevated duties on consumer tires im-ported into the U.S. from Chinafirst in 2009-11 and more recently in 2015it had the desired effect.
The duties slowed the influx of low-priced tires from that country dramatically, and now the industry is waiting to see what effect the pending antidumping and countervailing duties on medium truck tires will have. The government's final ruling is due in January although the duties are being enforced already.
If anyone thought the Chinese tire makers would go away quietly, or that the duties would lessen their interest in selling tires in the U.S., they were decidedly mistaken.
The government's efforts to level the playing field forced China's tire makers to rethink their reasons for selling in one of the world's largest tire markets.
Some abandoned their dreams of gaining U.S. sales; others doubled down, with a handful shifting production to new plants outside of China, primarily Thailand, to circumvent the duties.
Two companies, so far, have taken an even bigger stepestablishing their own U.S. manufacturing capacity.
Giti Tire Group, the predominantly Chinese company that has its headquarters in Sing-apore, broke ground in 2015 on a $560 million passenger and light truck tire factory it's building in Richburg, S.C.
A second Chinese tire maker, Qingdao Sentury Tire Co. Ltd., is following that lead, disclosing plans to build a $530 million pass-enger and light truck tire plant in LaGrange, Ga., that it expects to have in operation by 2018.
What's striking is how quickly Giti and Sentury Tire acted in deciding that local manufacturing capacity was their best approach to successfully competing in the U.S.
Sentury Tire, for example, hasn't even established a research and development center in the U.S.usually a precursor to establishing a plant in a new marketbefore making its decision to build a factory. Instead it will incorporate an R&D center into the new plant to design tires better suited for North American roadways.
These moves also could have a profound impact on how Chinese tires are perceived in the U.S. by consumers and tire dealers alike.
With a U.S. manufacturing presence, these tire companies will be able to say their products are made in Americaand that's a key selling point with many American consumers.
The factories also are likely to pave the way for other Chinese tire makers to build their own plants in the U.S.
What will be interesting is just where the pricing of tires made in America by Chinese companies will land.
Will they be priced decidedly lower than competitors' products, or priced more in line with the market?