US car makers seek tariff exemption for OE tyres

ERJ staff report (TB)

Washington DC -- The three US domestic car makers are asking the Obama administration to exempt OE tyre imports from China from trade restrictions being considered, claiming that to do otherwise would “harm the US automotive industry…while providing little or no corresponding benefit” to the domestic tyre industry.

The plea, made at last week's hearings at the Office of US Trade Representative (USTR) in Washington by the Automotive Trade Policy Council on the auto makers' behalf, drew a sharp rebuke from United Steelworkers union, which is seeking the import restrictions in an effort to protect jobs at US tyre plants.

The ATPC estimates including OE tyres - which represent only about 5 percent of tyres imported from China - among those subject to tariffs would increase the cost of tires for affected models by $50 to $150 per vehicle.

“This burden would fall disproportionately on our most price-sensitive consumers and some of our newest fuel-efficient models,” the group wrote.

The ATPC did not specify which US car models use Chinese-made tyres, but ATPC President Stephen Collins told the USTR that its members - Chrysler L.L.C., Ford Motor Co. and General Motors Corp. - have committed “considerable resources” to develop the engineering oversight and quality processes necessary to source OE-quality tyres from Chinese tyre plants.

The ATPC also argued that subjecting OE tyres to the proposed tariffs - as much as 55 percent of value initially - would undermine the Obama administration's efforts to stabilize US car companies and the industry's efforts to improve fuel mileage.

The ATPC echoed other parties' contentions that restricting Chinese imports for a three-year period “is unlikely to justify the expense of reopening a closed North American facility” and that offshore sourcing would shift to other low-cost production sites.

Additionally, the ATPC expressed concern that restricting the US car makers' supply of low-cost OE tyres could result in “enhanced pricing power” for the leading tyre companies, thereby leading to price increases across the entire OE range.

The ATPC describes itself as a non-profit trade association that represents the common international economic, trade and investment interests of its member companies.

The ATPC testified Aug. 7 at a hearing the USTR organized to gather information to help the Obama adminstration rule on the International Trade Commission's recommendation to impose tariffs on imports of passenger and light truck tyres from China.

From Tire Business (A Crain publication)