The onset of tariffs levied on truck and bus tires manufactured in China — a country that provides more than double the amount of TBR tires to the U.S. than any other country in the world — begs a question that commercial dealers no doubt ask themselves daily:
Is there enough product to satisfy the market?
If the answer is yes, and we hope that is the case, then there is no issue at all. In this still-booming economy, an ample supply means stable prices, robust business and satisfied customers.
But if the answer is no — and recent data provided by the U.S. Tire Manufacturers Association (USTMA) seem to suggest that — what does that mean? Will tire prices spike?
The USTMA recently predicted shipments of medium-duty truck/bus tire in the U.S. will drop by nearly 7 percent this year, with the newly imposed elevated antidumping and countervailing duties on Chinese tires being cited as a key factor in the decline.
On the demand side, it appears the trucking industry doesn't anticipate slowing down anytime soon, although the American Trucking Associations (ATA) reports that last year's growth in the industry — 6.6 percent — has eased during the first quarter of this year.
According to Dawn Brusseau, associate director for commercial vehicle solutions for IHS Markit research, registrations for Class 8 tractors increased in 2018, a trend the firm predicted would continue by this year, growing about 8 percent, to 340,000 units.
"Your future is secure. Trucking is only gaining in popularity. ... The need for trucking is strong and will continue to be strong within the market," she said, predicting this year will be a "peak year in the current buying cycle," as fleets continue to replace aging trucks.
Some tire manufacturers already have begun to react to the high demand/low supply scenario. As of March 5, Bridgestone Corp. increased prices of its Dayton-brand tires, sourced almost exclusively from China, by 20 percent. That comes on the heels of a 10-percent price increase initiated last fall.
There is some talk that suppliers ramped up imports of product late last year in anticipation of the duties and more Trump-imposed tariffs. Perhaps that will curtail, or perhaps slow, other manufacturers from increasing prices.
So what does all this mean for your business?
The best advice might be to keep a closer-than-usual watch on the market. Talk with your suppliers. Read up on the happenings in Washington.
And in the meantime, let's hope the nation keeps on truckin'.