The Chinese Tire Tariff

On September 11th President Obama announced a new tire tariff imposed upon Chinese tires. Many tire companies, tire distributors and tire dealers are not happy with the decision to impose an additional 35% tariff to the existing 4%. Plus, there is a quota of 21 million tires - compare that with last year's Chinese tire imports of over 46 million tires, and it's easy to see why this is controversial legislation.

Industry giant Toyo is reported to be moving its entire manufacturing structure from China to Japan. Other manufacturers like Kuhmo, Cooper and Hancook announced increased prices to dealers which in the end trickles down to consumers. According to Tire Business a 16 inch tire that had a cost of $37.78 with the 4% tariff will now cost the importer $50.50 with a 39% tariff.
Another problem is tire supplies. Finding a matching tire will become a problem if the tire manufacturer is either not carrying the tire you need or the manufacturer is taking step to restructure its manufacturing process. Hancook tires are sometimes standard equipment on new American cars and light trucks.

Industry specialists are voicing concerns of the effect shortages and higher prices will have on the already challenged retail industry fearing pending layoffs.
Others call the legislation discrimination since only Chinese imports are involved.
So, whose idea was this? The United Steelworker’s Union. They contested that Chinese tire imports were destroying the US tire industry causing layoffs of its members.
But the Tire Industry Association disagrees with the union. Instead they believe that low-end Chinese tires do not directly compete with the high-end American tires. Another concern is that US manufacturers will not be able to fill the supply gap left by reduced imports. TIA also believes the tariffs will cost more jobs than they create.

Only time will tell, but, when hearing of Chinese tires, I cant help but be reminded of the poisoned pet food, unsafe children’s toys and the infamous Chinese drywall. Maybe what comes around really does go around.