In the end, three commissioners of the U.S. International Trade Commission agreed with the United Steelworkers union that an upsurge of passenger and light truck tire imports from China were causing material injury to the U.S. tire industry.
The other three commissioners, however, agreed with Chinese tire manufacturers and importers that the financial statistics for the U.S. tire industry during the period of investigation (POI) did not suggest material injury caused by Chinese imports or any other source.
These were the revelations from the ITC final report on the antidumping and countervailing duty investigations against Chinese passenger and light truck tires.
The ITC issued the heavily redacted, 230-page public version of the report Aug. 17, a week ahead of the Aug. 24 deadline.
In the report, the six commissioners presented their reasons for finding as they did at the ITC public hearing July 14.
Under ITC rules, the 3-3 vote represented an affirmative determination of material injury, meaning that the countervailing and antidumping margins calculated by the U.S. Department of Commerce became final.
On Aug. 10, Commerce issued a notice setting final antidumping duty levels ranging from 14.35 to 87.99 percent and final countervailing duty levels of 20.73 to 116.33 percent.
The agency directed U.S. Customs and Border Protection to begin collecting the duties, which will be in effect for the next five years.
The USW petitioned the ITC for relief against Chinese passenger and light truck tire imports in June 2014, under Sections 701 and 731 of the Trade Act.
From 2009-12, the union obtained high tariffs against the same categories of imports under Section 421 of the Trade Act, which grants relief to U.S. industries injured by rapid increases in Chinese imports.
In its petitions and at subsequent ITC hearings, the USW presented statistics showing that Chinese tire imports to the U.S. skyrocketed between 2012-14, after the tariffs lapsed.
In their affirmative determination in the final report, Vice Chairman Dean A. Pinkert and Commissioners Irving A. Williamson and Rhonda K. Schmidtlein noted the USW statistics were accurate.
“This increase in market penetration at the expense of the domestic industry is particularly noteworthy in light of the fact that subject imports competed in overlapping geographic markets and segments of the U.S. market with the domestic industry,” the commissioners wrote.
Four of the five biggest U.S. purchasers of passenger vehicle and light truck tires reported buying both Chinese and domestic passenger and light truck tires simultaneously, they wrote.
“Importers increased their U.S. shipments of PVLT tires from China of both branded and private label tires from 2012 to 2014,” they said.
Chinese tire imports also pervasively undersold domestic tires “at sizable and increasing margins” between 2012-14, according to the commissioners. They said they found underselling 100 percent of the time in 72 possible quarterly comparisons, they said.
The domestic tire industry and all domestic manufacturers were profitable during the period, according to the commissioners.
Increasing consumer demand and lower raw materials costs made that likely, they said.
Nevertheless, the domestic industry also saw declines in shipments, net sales, production and employment during the period, they said.
The dissenting commissioners—Chairman Meredith M. Broadbent and Commissioners David S. Johanson and F. Scott Kieff—disagreed with the other commissioners on basic figures, holding that the domestic tire industry maintained steady levels of output and employment during the time period.
“While the domestic industry lost market share during a time of rising demand, we have found that the decline in market share was not directly related to subject import volume increases, and the decline in market share coincided with significant improvement in the domestic industry's financial position,” they wrote.
“We also do not find that subject imports prevented price increases, that otherwise would have occurred, to a significant degree during the POI,” they wrote. “Although apparent U.S. consumption increased during the POI, we do not find significant price suppression in light of the substantial decline in costs relative to prices and the lack of evidence of any cost-price squeeze.”
