US agency finds tire imports 'significantly undersold'

Washington – Investigators for the US International Trade Commission have concluded that passenger and light truck tires imported from South Korea, Taiwan, Thailand and Vietnam the past few years "significantly undersold" similar tires produced domestically.

That conclusion and other economic factors led the ITC commissioners in mid-July to approve moving forward with antidumping and countervailing duty investigations into P/LT imports from Taiwan and the three other Asian nations.

The ITC disclosed its findings in a 260-page document it posted online.

The investigations are in response to petitions filed in early May by the United Steelworkers union, which claims tire producers from these regions are dumping their products in the US at margins ranging from as low as 5.48% (Vietnam) to as high as 217.5% (Thailand).

Other factors the ITC took into consideration in deciding to move forward included substitutability of imports for domestically produced tires and the financial impact on the domestic tire industry.

"Given that the domestic-like product and subject imports are moderately to highly substitutable and that price is an important factor in purchasing decisions, the record also indicates that this underselling resulted in a market share shift from the domestic industry to subject imports," the ITC said, without disclosing specific numbers in the highly redacted report.

"Consequently, for purposes of the preliminary phase of these investigations we find that cumulated subject imports have had significant adverse price effects."

The degree of substitution between domestic and imported P/LT tires depends upon factors such as relative prices, quality (e.g., grade standards, defect rates, etc.) and conditions of sale (e.g., price discounts/rebates, lead times between order and delivery dates, reliability of supply, product services, etc.), the report states.

Based on available data, the ITC staff said it believes that the degree of substitutability ranges from moderate to moderate-to-high between domestically produced P/LT tires and P/LT tires imported from subject sources.

The report puts apparent US consumption of P/LT tires at approximately 320.8 million tires, valued at $23.4 billion (€19.8 billion), in 2019.

US producers' shipments of P/LT tires within the US totalled 138.9 million units ($12.6 billion) in 2019 and accounted for 43.3% of apparent US consumption by quantity and 53.8% by value.

Imports from the subject sources totalled 85.3 million tires ($4.4 billion) in 2019 and accounted for 26.6% of apparent US consumption by quantity and 18.8% by value, the study concluded.

Imports from nonsubject sources – Canada, Mexico, Japan, Indonesia, etc. – totalled 96.6 million tires ($6.4 billion) in 2019 and accounted for 30.1% of apparent US consumption by quantity and 27.4% by value.

During the period of investigation, the ITC determined that the volume of low-priced imports from the targeted Asian nations and Taiwan – which were "moderately to highly substitutable" for the domestic-like product – was "significant and increasing" and "significantly undersold" the domestic-like product, which resulted in the domestic industry's losing market share to the imports.

While the domestic industry remained profitable, the ITC determined its gross profits, net income and operating income declined and that competition from the lower-priced subject imports was a factor in its declining financial performance.

The next deadline in the US government's investigations is 26 Aug, when the Commerce Department is to file its preliminary determination on the CVD case and 9 Nov on the AD case.

If Commerce determines preliminarily that dumping and/or unfair subsidisation is occurring, it will instruct US Customs and Border Protection to start collecting cash deposits from all US companies importing P/LT tires from South Korea, Taiwan, Thailand, and Vietnam, as appropriate.

Final determinations by Commerce in these cases are scheduled for 9 Nov, for the CVD investigation, and 25 Jan 2021, for the AD investigation, but these dates may be extended, Commerce said.

The deadlines for final orders for the respective cases are 31 Dec, and 18 March.