Since early June, the United States has launched a new round of investigations into Chinese tire makers allegedly violating US anti-dumping and anti-subsidy rules, the Beijing-based Economic Observer reports.
The paper said the probe indicates that Washington has intent to raise trade barriers against China's tire producers after it imposed tariffs on Chinese tire exporters in 2009, citing concerns about dumping and the Chinese government's subsidies hurting US manufacturers.
Using a transitional product safeguard mechanism under the World Trade Organization, the United States slapped 35%, 30% and 25% tariffs on Chinese tire exporters in 2009, 2010, and 2011 respectively. Due to the tariffs imposed during these three years, tire exports from China fell about 50% from previously, trade statistics showed.
The Economic Observer spoke to Bai Haibo, a division director at China Exports & Credit Insurance Corp, who said it is possible the United States could raise punitive tariffs against Chinese tire exporters up to 60% after wrapping up the current investigations.
Bai said the estimated higher tariffs, which could be implemented in early December at the earliest, could force many Chinese tire makers to drop out of the US market unless they come up with effective measures to fend off the impact.
Sailun Group and Qingdao Doublestar Tire Corp are among the Chinese tire exporters that have tackled the US trade barriers by setting up production lines overseas.
Wei Quanhui, a sales manager with Sailun, said his company has built production lines in Vietnam since 2012 so that clients are able to shift orders from China to its Vietnamese factory. He added that Sailun moved its production lines abroad because it had anticipated that after the stiff tariffs imposed during the 2009 to 2011 period, the United States would mete out yet harsher financial punishment for Chinese tire exporters.
Wei said the expected 60% tariff from the US authorities will boost prices of China-made tires compared with other tire products imported from other countries, as a result of which Chinese firms are set to lose market share in the US. He also noted that without relocating its production to Vietnam, Sailun would have had to bear a greater financial impact arising from rising trade barriers erected by the US government.
Doublestar likewise will set up a factory in Southeast Asia to take on the rising US tariffs. An agreement on the new factory has been signed, and construction of the production base is scheduled to be completed next year, the Economic Observer stated, without stating the country in question.
The report added that the new plant, with a total area of 72 acres, will have an initial production capacity of 400,000 units, and the volume is expected to rise to 600,000 during the second phase and even to 3 million in the third stage.
North America accounts for 30% of Doublestar's total exports, making the region one of the largest clients of the China firm. In addition to the US.market, Doublestar said it is seeking buyers in other countries in Africa, the Asia-Pacific and Europe.
