By Mark Huffman
ConsumerAffairs.com
September 14, 2009
Consumers shopping for new tires have recently found some
pretty good deals, thanks to the introduction of a number of
foreign-made brands to the U.S. marketplace. But now a looming U.S. -
Chinese trade war threatens to bring those deals to a screeching
halt.
The U.S. has slapped additional tariffs onto all tires made in China, which have made up significant portion of the low-end tires sold in the U.S. Suddenly, those low-end tires won't be so cheap.
Last week the Obama Administration announced a 35 percent tariff on Chinese tires, delivering on his promise to organized labor that he would do more to protect U.S. manufacturing jobs. China, meanwhile, responded to the tariff over the weekend by imposing its own tariff on U.S. automotive parts and chicken products.
Some Chinese manufacturers might cut back on the number of tires they export to the U.S., concluding they won't be competitive at a higher price. In 2008, an estimated 17 percent of all tires sold in the U.S. were stamped "made in China."
Jim Mayfield, who runs a large tire time importer and distributor in Memphis, Tennessee told the Wall Street Journal that he expects significant tire price increases within the next 60 days. The price of low-end tires, he says, could rise as much as 30 percent.
There's a significant different in the price consumers now pay for a cheap, imported tire and a top of the line model from a U.S. manufacturer. While the cheap tire might cost as little as $50, the premium tire can go for $200 or more. Multiply that difference by four, and it can add up.
Foreign tire manufacturers outside of China now have an opportunity to step in and take China's market share in the U.S. market, but industry analysts say that won't happen overnight. It could take months to ramp up the extra production to meet that demand.
The example of the U.S. tire tariff on China might also serve as a cautionary example. Some companies might be leery of flooding the U.S. market with low-priced product if it might bring on similar retaliation.
As a result, consumers hoping to keep their old cars on the road longer will probably have to pay more for new tires. Compounding the problem is the declining U.S. capacity to produce tires. The result could be fewer tires on the market, leading to shortages and pushing prices higher, especially if demand picks up.
Chinese tires have not been without controversy in the U.S. In 2007 a brand of Chinese tires was blamed for a fatal van accident in Pennsylvania. A suit filed in the case claimed tread separation caused a cargo van carrying four passengers to crash, killing two passengers and injuring the other two. The light truck tires were sold under the names Westlake, Telluride, Compass and YKS.
Later that year, 24 state attorneys general issued recalls of an estimated 270,000 tires, imported from China, that may be unsafe.
