TARIFF ON CHINA'S TIRE IMPORTS

Tariff on China's tire imports

Tariff on China's tire imports

Introduction

Chinese tire industry executives are gearing up to challenge a UK trade proposal calling for the imposition of tariffs on Chinese tire imports. Industry insiders say the remedy proposal will not only hurt China's tire industry but also the interests of UK tire importers and consumers. Zhang Cheng has more. The UK International Trade Commission, or ITC, proposed a remedy of up to 55 percent special import duties on Chinese-made tires. The current duties stand at around three percent.

Discussion

U.K. auto manufacturers, who are counting on sales in China to help ride out a global downturn, could also face a disruption if the Chinese government pushes ahead with a dumping investigation on parts exports to that market. Between 2004 and 2008, China's tire production capacity surged by 152% and is projected to jump an additional 16% by 2010. At 235.2 million tires, China's production capacity in 2008 was more than three times greater than its shipments to its home market. U.K. imports of tires from 2004 to 2008 jumped from 14.6 million to 46 million. China's share of the U.K. tire market surged 255% in that time, to 16.7% from 4.7%.

Meanwhile, four U.K. tire plants closed in 2006 and 2007. Three more are planned for closure this year. There were 5,168 fewer workers in the U.K. tire industry in 2008 than there were in 2004. Shares of U.K. tire makers rose as investors reacted to an expected increase in profit margins as lower-cost imports are hit by price increases expected to reach 50 percent or more. But U.K. tire distributors and some manufacturers had opposed the imposition of the tariffs and analysts cautioned UK's action could complicate longer-term efforts to diversify production to lower-cost regions. U.K. auto manufacturers, who are ...