How can Chinese tires fight back against sky-high tariffs? !
Tire prices rise 10% to 25%
At 13:01 on February 4, 2025, the US decision to impose a 10% tariff on all Chinese goods exported to the US officially took effect. The US will continue to impose a 10% tariff on the existing tariffs on Chinese products.
On the same day, China announced that it would impose a 10% or 15% tariff on some imported goods originating from the United States from February 10.
The "suffering" of overseas tire factories is also imminent. Previously, the United States had stated that it would impose a 25% tariff on Canadian and Mexican goods. However, the United States temporarily withdrew this decision on February 3, local time, and gave a one-month buffer period.
The reason given by the United States is to use one month to exchange for concessions from Canada and Mexico on border and anti-crime law enforcement. But one month later, Mexico may still impose a 25% tariff on tires exported to the United States.
And the latest news shows that the United States also plans to impose tariffs on products exported from the European Union to the United States. All these have plunged the world into new uncertainty.
With the increase of trade barriers to the world, the difficulty of Chinese tire companies exporting to the United States has increased again!
The unit price of Chinese tires exported to the United States has exceeded 1,000 yuan
Public data shows that in 2024, China will still be the main importer of truck tires in the United States with high cost performance. It ranks sixth in the overall import source ranking.
How cost-effective are Chinese tires?
It is the cheapest source of truck tire imports in the United States. After adding the highest anti-dumping duty of 22.57% and the highest anti-subsidy duty of 66.28%, a truck tire sold to the United States is still only US$113.06 (about RMB 822), even lower than the price of tires exported from Southeast Asia to the United States.
However, after the tariff increase, the cost of truck tires exported from China to the United States will no longer be "cheap" as before. The price of a truck tire will rise to 1,000 yuan, and the price advantage is no longer comparable to that of Southeast Asia.
What's worse is that not only the export price of tires has become more expensive. The difficulty of tire exports is also increasing.
Because this time the tariffs increased by the United States also blocked Mexico and (possibly) European products - intending to cut off the production capacity layout made by Chinese tire companies in order to export to the United States.
In addition, since the United States has increased tariffs on all Chinese export products, not only the replacement business of Chinese tire companies is in crisis, but also the supporting business is also "worried".
Taxes on cars, supporting business in crisis
Some foreign tire companies stated in their financial reports that due to the EU's decision to increase taxes on electric vehicles produced in China by up to 36.3% in 2024, the supporting business of tire companies has been greatly affected. And this time the United States has imposed a 10% tariff on all Chinese products, which is also difficult not to put pressure on the supporting business of tire companies.
In 2024, my country's automobile exports will reach 6.41 million vehicles; including 5.4955 million passenger cars and 911,800 commercial vehicles, involving more than 795 tons of automobile tires. The 10% tax increase by the United States this time will at least affect 10 million supporting tire businesses.
Combined with nearly one million truck tires for the replacement market, China's tire exports are in a worse situation!
Expectations for tariff changes
Although such pessimistic expectations were heard at the beginning of the year, looking at the trade rules in recent years, there is a certain probability that the tariff rate will drop. In fact, the US has adjusted and lowered the anti-dumping and countervailing duty rates on Chinese Southeast Asian tires many times in the past four years.
Under inflation, trade changes, and all rules may change with the times and circumstances. In addition, Mexico and Canada's suspension of the implementation of new tariffs on the 30th also provides "new possibilities for the implementation of tariffs."
However, everything is just speculation, and tire companies should also prepare for the rainy day and find a solution strategy as soon as possible in the global blockade...
