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Are cheap imports hurting the U.S. tire industry?

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Titan and USW claim cheap imports are hurting the U.S. tire industry.

Are cheap imports hurting the U.S. tire industry?

Titan International  and the United Steelworkers union (USW) have filed petitions against cheap tire imports from China, India and Sri Lanka, claiming they are harming local industry and affecting jobs.

So, the big question is — are they right?

First of all, here’s a bit of background.

Why have petitions been filed?

The petitions, filed with the U.S. International Trade Commission (ITC) and the U.S. Department of Commerce, allege that cheap off-the-road (OTR) imports from China, India and Sri Lanka are harming the country’s domestic OTR tire-producing industry. They claim that China and India are dumping tires in the U.S. market and that all three countries are benefitting from subsidies by their own governments. Both organizations want the U.S. government to investigate what they say are “unfair trade practices.”

Titan chief executive and chairman Maurice Taylor said that while Titan won antidumping and countervailing duties on OTR tires from China in 2007, foreign companies are now putting wheels into the tires to get around the duties. Unmounted wheels are covered under the last ruling, but mounted tires are not.

“This case represents a significant effort by our company to restore conditions of fair trade to the U.S. market for OTR tires,” Taylor said.

“We are hopeful that a thorough investigation will show the merits of our case and result in meaningful relief for the domestic industry.”

USW district director Mike Millsap said: “Rising volumes of unfairly traded imports are driving down prices and harming domestic producers and workers. This is exactly the type of situation our trade remedy laws were designed to redress, and we are proud to use those laws to stand up for our members.”

So, are cheap imports hurting the U.S. tire industry?

There is no doubt some areas of the domestic tire industry suffer because of cheap imports. In 2014, imports from China, India, and Sri Lanka accounted for an estimated 41 percent of all such imports from the world. However, most manufacturers in the U.S. with union workforces operate at the higher end of the market, whereas countries like China produce at the low end.

In 2014 the USW petitioned the Commerce Department to impose tariffs on Chinese tire imports, which the union alleged were sold below market prices and threatened union jobs.

The Tire Industry Association (TIA), however, didn’t support the move and neither did members of the Rubber Manufacturer’s Association.

Back in 2014 the Tire Industry Association (TIA) said it was “sympathetic”  to the loss of U.S. manufacturing jobs, but understood that “this has occurred over the course of many years and under a multitude of trade policy initiatives.”

“TIA believes that a reduction of this magnitude in the quantity of Chinese tires imported would itself create a market disruption, and cause very real harm to our member companies and the U.S. consumer.”

Gary Hufbauer, a trade expert at the Peterson Institute for International Economics, estimated that between 2009 and 2012 — when the U.S. imposed tire-making tariffs on China — each job saved was offset by at least $900,000 in higher consumer prices for tires sold in the country. He said safeguard tariffs “extracted more than one billion dollars annually from American households, causing a net loss of jobs in the American economy.”

But could safeguard tariffs really work?

The U.S. tire market is highly competitive, and it’s likely other foreign manufacturers will step in to fill the gap left by China, Indonesia and Sri Lanka as importers scramble to find tires from other countries.

China also produces low-end products, whereas U.S. producers tend to concentrate on supplying higher-end products.

None of the eight big tire manufacturers that are members of the industry’s main U.S. trade group, the Rubber Manufacturers Association, have joined the union’s suit. The manufacturers — only two of which are headquartered in the U.S. — have operations in China and exports from their China factories could be hit by tariffs too.

So, what happens now?

The ITC has scheduled a January 29 conference at its headquarters in Washington, D.C., to allow parties supporting or opposing the imposition of duties to make oral presentations in connection with the petitions. Preliminary determinations are likely by summer and final determinations are due in early 2017 at the latest. So there’s a long way to go.

1 Comment

1 Comment

  1. Benjamin Paterson

    December 28, 2016 at 2:37 am

    hi!
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