Simmons: Tariffs to take significant toll on US tire market

Dublin – Washington's imposition of import tariffs on automotive vehicles & parts is going to make a significant dent in US sales of vehicles and, in turn, tires, believes Robert Simmons, director, tire & rubber research, GlobaData.

Most directly impacted will be the OE segment, which represents about 20-25% of the tire market, Simmon said at AGM of the International Institute of Synthetic Rubber Producers (IISRP) held 7-10 April in Dublin.

Post-Covid, he said, the US market had been “recovering quite well” through to 2023-24, with GlobalData originally expecting growth of about 2% or 3% for this year.

But that projection has altered significantly with the announcement of tariffs, including the imposition of a 25% duty on imported vehicles into the US as of 3 April. (ERJ report)

Then, from 3 May, a second set of duties will apply to parts & components for automotive industry, including powertrains, said Simmons, noting that the classification encompasses tires for cars, trucks and even off-road vehicles.

“So, it's pretty wide-ranging, and at the moment it's sticking,” said the GlobalData analyst, noting that 47% of vehicles last year were assembled outside of the US.

Simmons, therefore, forecast that “prices of vehicles are going to rise in the US… [and] our automotive team reckon, roughly, you lose about somewhere between 1 million and 1.5 million vehicle sales in the US this year. And then that continues as we as we go forward.”

Meanwhile, he said, just under 25% of vehicle sales in the US are from outside of North America: about 17% of vehicles coming from Japan and South Korea and about 5% imported from Europe.

With prices for these imports set to rise as well, about 250,000 vehicles from Japan “will be taken out of the system”, as will 200,000 units from Korea and about 100,000 from Europe.

Simmons further cautioned that GlobalData’s assessments did not factor in the potential impact of a global recession, which would “obviously takes a lot more vehicles out of the system.”

On 14 April, president Donald Trump suggested that he may temporarily exempt the automotive industry from the tariffs in order to allow car makers to adjust their supply chain.