Posted on 09/18/2009 8:29:21 PM PDT by Born Conservative
A new tariff on tires produced in China could shift prices for inexpensive rubber into overdrive.
"It changes the market for cheap tires," said Bruce Harrison, an automotive industry analyst at IHS Global Insight, a Boston-area economic forecasting firm. "We're going to see almost immediate price increases at the bottom end of the market."
President Barack Obama announced last Friday the U.S. would levy steep tariffs on Chinese-manufactured tires in response to pressure from the United Steelworkers union, which represents workers at U.S. tire plants. The union argued cheap Chinese imports decrease U.S. tire production and create job losses.
Retailers say the result could deflate consumers looking for bargain-priced tires and may affect higher-priced products if manufacturers spread the increase across different product grades.
"It's going to affect everyone who goes out to buy tires," said Bill Williams, chief executive at Jack Williams Tire Co., which is based in Moosic and has 27 regional stores. "The consumer is going to pay 20 percent more, even though he buys a tire that's not made in China."
China's share of U.S. tire sales hit $1.8 billion in 2008, or 17 percent of the market, triple its 2004 volume.
Some U.S. tire makers, including Goodyear and Cooper, shifted some production to China for low-end tires, which cost roughly $50 to $60 each.
Dealers say the initial 35 percent duty on Chinese tires, which takes effect Sept. 26, could push more production to other offshore locations, such as Korea and Venezuela.
"I don't think there are a lot of other good, high-volume options to pull from," said Pat Sandone III, vice president at Sandone Tire Care Centers, a Scranton-based wholesaler and retailer. "I think tire prices, unfortunately for everybody across the board, will move up."
The rationale behind the duty, which will drop to 30 percent in 2010 and 25 percent the following year, is to protect U.S. tire manufacturing. But the move isn't expected to crank up domestic tire production.
"American factories cannot produce a lower-end tire at that price," Mr. Williams said.
Tire producers are silent about the impact, said David Kost, vice president at Kost Tire and Auto Care, which is based in Binghamton, N.Y., and operates 52 stores, including 22 in Eastern Pennsylvania.
"None of the companies are saying anything yet," he said.
The levy could make U.S.-made products more competitive, said John McCarthy Jr., president of McCarthy Tire and Automotive Centers, which is based in Wilkes-Barre and has 28 stores. McCarthy Tire does not sell tires produced in China.
The result is expected to hit the poor the hardest.
"The tariff will impact those people who can least afford it," Mr. Harrison said.
Thanks Obama for making things just a little bit harder.
Typical Democrat policy.
South Korea will fill the gap.
I never lived during the carter years but what I have heard it was pure misery. I guess I am about to find out how it was with obama (carter II)
They shouldn't let anyone sell those cheap crap tires here anyhow. (I've had experience with chinese tires - they suck!)
Who in their right frickin mind would buy chinese tires. Idiots.
Hillary Flammond: “You’re an American?”
Nick Rivers: “That’s right.”
Hillary: My uncle was born in America.”
Nick: “Oh really?”
Hillary: “But he was one of the lucky ones. He managed to escape in a balloon during the Jimmy Carter presidency.”
From - Top Secret! (1984)
“such as Korea and Venezuela.”
Venezuela??? I guess Obama wants to support Hugo.
lol that’s funny. I was proudly born during the Reagan years, along with all other anchor babies. :(
Anyone who's bought Pep Boys tires has bought Chinese tires. They're relatively cheap and carry a reasonable warranty. I put 30,000 miles on mine. Of course, if you drive like Michael Schumacher, I don't recommend Chinese tires.
“I really don’t mind this, but it will be used as an excuse to raise the price on GOOD American made tires as well.
They shouldn’t let anyone sell those cheap crap tires here anyhow. (I’ve had experience with chinese tires - they suck!)”
Agree!
Not just the poor. The tightwads, as well.
My local Pep Boys carries Korean Kumho’s.
Obama beating up the tire company makes me want to Buy chinese tires. If he is against it then it must be good.
” union argued cheap Chinese imports decrease U.S. tire production and create job losses. “
:) cute. I might save it on my computer
Be my guest:
Chinese Tires Recalled
The Made in China label is just not having a good year.
There’s a major recall of Chinese-made tires for pick-ups, vans and sport utility vehicles.
This is just the latest of a series of recalls in recent months involving dangerous and deadly imports from China, including toothpaste, seafood and pet food. And toys. More than one million Sesame Street and Nickelodean toys marketed by Matell have been pulled off store shelves and spirited out of children’s toy boxes by anxious mothers, for containing lead paint and other safety issues.
The tire recall involves tires imported by Foreign Tire Sales Inc., previously identified as possibly posing a risk. More than 250,000 tires are being recalled, all of them steel-belted radial replacement tires purchased between early 2004 and mid-2006, sold under the brand names Westlake, Compass and YKS.
The import company was ordered by the National Highway Traffic Safety Administration recall as many as 450,000 tires bought from Hangzhou Zhongce Rubber Co. since 2002. The reason is this —
Korean Kumhos ? Sounds pornalistic.
“They shouldn’t let anyone sell those cheap crap tires here anyhow. (I’ve had experience with chinese tires - they suck!) “
Why the hell did you buy them? Are you saying you need the government to protect you from making bad choices?
I won’t buy Chinese tires and I don’t need a government rule or tax to keep from doing so.
I do think people who DO want to buy cheap crappy tires should have the right to do so. Some folks can’t afford anything else.
Increasing the tariff on Chinese tires WILL raise ALL tire prices because it in effect limits competition.
Competition is good.
Tariffs are bad because they just get passed on to the consumer in the form of higher prices on ALL similar items, regardless of whether they are the target of the tariffs or not.
The biggest beneficiaries of this are the UAW thugs.
We are getting there. I was 13 when Reagan was elected. My dad’s company rocked in the 80’s and early 90’s. It then started to struggle when Clinton became President. Hmmm... coincidence? I don’t think so. Democrats hate small business.
Timely....I need four tires for a car we don’t use that much, but want to keep (My wife wants to keep). For a not so top of the line tire it will cost me $125.00 each out the door for the danged things. $500.00 for not the best tires.
Last year I had to put new tires on the car we use the most, so I bought top of the line tires which out the door cost $660.00 for the lot IIRC.
Now the prices are going to jump sky high!?. At what level of the stratosphere are these prices now?
I only buy Mastercraft (Cooper); made in the USA (although they do have plants in Asia and Europe as well)
pissant: “Who in their right frickin mind would buy chinese tires. Idiots.”
You get what you pay for. Safety, durability, and ride quality are all heavily dependent on the quality of the tire selected, but some folks simply can’t afford to buy high-end tires.
For those who CAN afford to buy better tires but choose cheap Chinese ones instead, I hope it’s because of ignorance rather than idiocy. Pay the money and get something that is safer to use, lasts longer, and drives better. Those tires might just end up saving your life.
That was a recall from August 2007. I believe the Chinese manufacturer of those particular tires stopped exporting to the US to avoid financial liability from that particular fiasco. The importer of those particular tires was Foreign Tire Sales Inc (FTSI), not Pep Boys which, like Wal Mart, deals directly with manufacturers instead of going through wholesalers like FTSI.
The interesting thing about these tariffs is that they affect tires produced by China tire plants owned and operated by Goodyear, Cooper, Bridgestone, Michelin and others, all of which have manufacturing plants in the U.S.
“Korean Kumhos ? Sounds pornalistic. “
They actually make a pretty good tire at a reasonable price.
I tend to lean toward Bridgestones myself. (I am currently running a set of German made Goodyears on one of my cars)
Hawking a rubber loogie.
“I never lived during the carter years but what I have heard it was pure misery.”
Not for all, I did real well in those years.
My highest income years were 1976 to 1982.
My construction business did extremely well.
Those that lived on credit didn’t do so well of course those that live on credit never do in any economy.
That's their low end tire line?
To be honest I didn’t check. It was the tire they had stacked up on the floor in various sizes with placards on them, most of them less than $50. The others sat on the rack in back and I saw no price tags.
Kumhos are actually an excellent tire, made for every kind of car or truck.
I'm not a big fan of tariffs, but it has to be said that Hoover instituted tariffs at a time when the US was running big trade surpluses. Now that we're running big trade deficits, I seriously doubt tariffs will have the same negative effect (via retaliation by trading partners). For one thing, China's response was to target our chicken and car parts exports to China, which are minuscule in dollar terms. The ubiquity of smuggling rings in China will also help bypass these tariffs - although the cost of customs avoidance (bribes for officials to look the other way, or finding new unsecured routes) will raise the final cost to Chinese consumers.
I also despise communist enemies....
Chinese tire manufacturers are also involved in industrial espionage against U.S. tire manufacturers. Earlier this year two employees of Chinese-based tire manufacturer were caught in a Goodyear plant in Kansas photographing production machinery which allowed Goodyear’s Chinese competitor to fabricate a similar machine using these stolen trade secrets. The two men are currently under federal indictment and are facing 150 years in federal prison.
Just bought coops for my wife’s car. Great tires.
Union money would be better spent on investments which would better the economy so that consumers could afford the better US manufactured tires.
South Korea is gonna love this.
In the case of chinese goods, the competition is bad - They sell their shit here so cheap that the only way others CAN compete with it is to sacrifice quality. We can thank Nixon for letting then in.
The fact that they are made by commie slave labor should be enough reason for the government to not allow them to even be sold here in the first place.
It is very easy to see why this tariff will likely not increase U.S. tire production:
I never buy "low end" tires, but if the new tariff is going to drive up mid-line tire prices, it most definitely hurts me, and, in effect, probably forces me to buy poorer quality, less safe tires! It certainly decreases the chances I would be able to afford a U.S. manufactured tire. :-(
Thanks, Obambi!
“this tariff” being Obama’s 35% tatiff, I mean...
Agh - I can’t even type tonight. “Tariff”
LOL! Blurb I saw on TV about this showed a TOYO tire - made in China and covered by the new tariff. Not many will knock Toyos.
I joined the Army under Carter. Lucky for that SOB that there was no internet back then.
I suspect that the Chinese will rebrand the tires as Made in xxxxx. Then the tires will make a stop in country xxxxx before continuing on the the US.
The market always finds a way around this bullcrap interference with free trade.
Correct. Go to TireRack.com and read the reveiws on Kumhos. TireRack is tire review central. I always go there to read lots of customer reviews on tires before I buy a new set of tires.
Tyres are already regulated: there are always going to be tyres that have a shorter life and lower performance, and those are going to be the cheaper ones.
If once you accept the principle of tarriffs in return for regulation, the Government will lose no time in interposing itself even further into the market. In no time you'll have a 50% tyre tariff funding the "Tyre Inspectorate of America", who do nothing but organise paedophile brothels and voter drives.
I only wish I were joking.
There is. Another country - possibly even America - must produce cheap tires. Problem solved.
America has many competitive advantages, but also has crushing taxes, crushing regulatory and legal burdens and a minimum wage.
If America wants to compete, it can do so. But will it? Not while Goverment intervention under cover of patriotism remains palatable to the American people.
I should probably expound on my last point.
It’s easy for Government to stick up a tarrif to protect domestic production. It screws up the market and makes everything more expensive, but if it protects an inefficient/unionised factory in a Senator’s home state then a tarrif is political gold.
Whereas it appears politically hard to actually reduce the burdens on American industry. Whatever you do to reduce regulatory oversight, reform tort, remove EPA regulations etc ends up improving life for most Americans, but visibly hurts special interests with deep pockets.
Or visibly hurts Unionised/Government drones/some lawyer lobby who were relying on the regulations/slanted playing field you just removed.
So rolling back regulatory burden costs political captital, and increasing it gains capital. That’s why it takes a titan like Reagan or Thatcher to get this stuff done.
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