US tariffs on China tyres unwarranted, importer says

14 September 2009 21:00  [Source: ICIS news]

WASHINGTON (ICIS news)--The Obama administration’s decision to impose new tariffs on Chinese automotive tyres was unwarranted and will not substantially increase domestic production, industry officials said on Monday.

Jim Mayfield, president of Del-Nat Tire Corporation, said that the tariff decision “was very unfortunate and disappointing and not supported by the facts”.

The White House and its office of the US Trade Representative (USTR) announced late on Friday a three-year tariffs assessment against imports of passenger and light truck tyres from China, effective on 26 September.

The tariff will be 35% for the first year, 30% in the second year and 25% in the third. These additional tariffs will be on top of the existing 4% duty assessed Chinese tyre imports under previous orders.

President Barack Obama said that he was imposing the sharply increased tariffs against Chinese-made tyres “in order to remedy a market disruption caused by a surge in tyre imports”.

The USTR office said that US imports of passenger and light truck tyres from China more than tripled in recent years, rising from 14.6m in 2004 to 46m last year, increasing China’s market share of US tyre consumption from 4.7% in 2004 to nearly 17% in 2008.

However, Mayfield argued that China’s increased market share in the US for entry-level tyres was gained fairly and was in reaction to decisions by US tyre manufacturers to exit the low-cost tyre market.

“US tyre manufacturers have been getting out of the private brand, entry-level market for the past ten years,” Mayfield said.  “US manufacturers don’t have any interest in the entry-level market, and their decisions gave China the opportunity to do more business here.”

He said he presented to the USTR letters from domestic US producers saying that they were exiting the entry-level market, “but apparently that didn’t matter”.

Mayfield, whose Memphis, Tennessee-based company imports large volumes of Chinese-made auto tyres, said his company was forced to seek out tyre manufacturers in China and elsewhere abroad as domestic US producers abandoned the low-end market.

Mayfield said the White House action likely will cause shortages in low-end tyres within 30-60 days and consequently will trigger price increases for entry-level tyres and eventually for premium brands.

“As the prices for entry-level tyres increase, that will give premium brand producers the opportunity to raise their prices,” he said.

Keith Price, communications director at Goodyear Tire & Rubber Company, said the White House tariff ruling would have little impact on his firm “because we have limited exposure to the kinds of products that are currently coming into North America from China”.

He said the US market impact of the tariffs decision is uncertain.

“Tyre makers can shift their current Chinese-based production to other countries to bypass any potential tariffs,” he said.

Domestic US tyre production is a major consuming sector for styrene butadiene rubber (SBR).  Domestic demand for SBR was earlier forecast to remain low through the end of this year.

The tariffs increase was sought by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW).

Domestic US tyre producers were not part of the petition, according to the USTR.

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By: Joe Kamalick
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