The United States Commerce Department issued a preliminary finding on Monday that usual Chinese tires destined to be used on passenger cars and light trucks were unfairly subsidized, threatening to harm the American tire industry by moving jobs to China. Thus, the Department has decided to impose punitive tariffs on Chinese tires, ranging from 17.7% to 81.3%, depending on the manufacturer, the Wall Street Journal reports.
The trade case was initiated by The United Steelworkers, an organization that represents over 28,000 tire workers. The union claims that Chinese tires imported last year benefited from government subsidies and were sold at a dumping price on the US market, below fair value. The preliminary findings of the US Commerce Department were commended by the union. According to statistics, Chinese shipments of tires have grown in value from $968 million in 2011 to $2.1 billion in 2013. At the same time the average price of US tires has decreased by 3%.
Goodyear Tire & Rubber Co. has last month reported a 4% drop in its tire sales in North America for the third quarter of this year. According to the company, dealers were filling their warehouses with cheap Chinese tires in anticipation of the trade action to be taken by the US. This is not the first time the US imposes punitive taxes on tires delivered by Chinese manufacturers – the previous action took place five years ago, also based on a complaint by the United Steelworkers. The action has expired in the meantime, though. If the action is confirmed next year, Cooper Kunshan Tire Co. Ltd, the Chinese unit of the US based tire manufacturer Cooper Tire & Rubber Co. will face a 12.5% duty on all tires shipped in the US.
Five years ago, when the US introduced its first punitive tax action against Chinese tire manufacturers, the country has threatened the US with its own trade restrictions in response, on auto parts and chicken meat. The Chinese Embassy in Washington is yet to comment on the matter.