TRIB testifies at US tariff hearings

Stevens supports antidumping duties of 22.57 per cent, CVD 65.46 per cent

The Section 301 Committee of the Office of the US Trade Representative (USTR) is holding hearings at the US International Trade Commission as part of a consultation process ahead of proposed import duties on certain Chinese produced tyres.

On 20 August 2018, TRIB managing director David Stevens testified before the USTR on the impacts low-cost, low-quality Chinese truck and bus tyres are having on the US retreading industry.

In short, Stevens suggested retreading “and its US employees are under severe threat from low-cost, low-quality truck tyres being imported from China”. According to TRIB data, in 2017 retreading only represents 42 per cent of the truck tyre replacement market (down from 50 per cent in 2013, “which implies a loss of 2.45 million retreaded truck tyre units”.

In order to counteract this threat, Stevens advocated for Court of International Trade (ITC) recommended antidumping duties as high as 22.57 per cent and countervailing duties as high as 65.46 per cent.

David Stevens’s complete testimony:

“As managing director of the Tyre Retread & Repair Information Bureau, I’m here today to represent the thousands of US-based employees of small to medium sized businesses that are either directly or indirectly involved in the tyre repair and retreading industries. I am commenting today specifically on the tariff subheadings related to new and retreaded tyres for trucks and buses (4011.20.10, 4011.20.50, 4012.12.40, 4012.12.80).

“In the US, the commercial truck retread industry grew rapidly during World War II to support the war effort and is now a $3 billion industry which directly supports more than 51,000 jobs in the US. Retreading has continued to play in important role in the trucking industry by delivering safe, reliable, and high-performing tyres that help trucking fleets keep their operating costs low. At the same time, retreading also delivers massive environmental benefits by saving scarce natural resources, reducing carbon emissions, and preventing tyres from being dumped in landfill and becoming breeding grounds for disease-carrying insects.

“However, this industry and its US employees are under severe threat from low-cost, low-quality truck tyres being imported from China. Every other type of tyre being imported from China into the US faces some type of duty, whether passenger, agricultural, or large off-the-road tyres. In fact, the International Trade Commission looked at the issue of commercial truck tyres coming from China and recommended antidumping duties as high as 22.57 per cent and countervailing duties as high as 65.46 per cent. At the final vote, one commissioner recused himself from voting allowing the recommended duties to not be implemented. This decision is currently being appealed to the Court of International Trade. Multiple other countries around the world have already implemented tariffs on Chinese truck and bus tyres being imported into their countries and the European Commission has recently recommended countervailing duties as high as 82 euros per commercial truck and bus tyre.

“Historically, retreading has always represented 50 per cent of the commercial truck tyre replacement market in the US. Since 2013, the compound annual growth rate of the commercial truck tyre replacement market has been 5.4 per cent while the retread industry has declined by 2.1 per cent. This means that in 2017, retreading only represents 42 per cent of the truck tyre replacement market and implies a loss of 2.45 million retreaded truck tyre units. This decline in the retread industry is completely driven by low-cost, low-quality Chinese truck tyre imports. Retread manufacturers and supporting industries have had to lay-off employees, reduce hours, and close their businesses in the face of this unfair competition.

“I say unfair competition and my assertion is backed up by price points here in the US and in China. For example, let’s look at pricing for the most popular truck tyre size in the US: 11R22.5. The average sales price of that tyre produced by US tyre manufacturers across multiple quality tiers is $231. The cost of production for that tyre (material and variable labour costs only) is $135. US retailers can buy that same size tyre from Chinese manufacturers for $125 and then sell them for $170. That same tyre sold by Chinese manufacturers in their own country is sold for between $180 and $220 per tyre. This impacts the retread industry because the cost savings for a retreaded tyre compared to a new tyre have historically been around 40-50 per cent less than the cost of a quality new tyre. With the price point of these low-cost, low-quality Chinese tyres getting closer to the price of retreaded tyres, many customers are looking only at price, instead of total cost of ownership, and choosing to buy the Chinese tyres. However, these low-cost, low-quality tyres will not last as long nor will many of their casings be retreadable. So, the tyres will need to be replaced sooner and there is no residual value in the tyre casing as many are not high enough quality to be retreaded. Large trucking fleets are continually testing their tyre products and they have consistently found that a combination of quality new tyres and retreaded tyres provides the lowest cost-per-mile for their businesses. This is why 100 per cent of the 100 largest trucking fleets in the US use retreaded tyres in their operations and time-sensitive operations such as UPS, FedEx, and the US Postal Service continue to utilize retreaded tyres. As a testament to the quality of retreaded tyres and their importance to the trucking industry, some larger fleets and truck stops have partnered with manufacturers to open their own retread plants. Future investments like these will be at risk without protection from low-cost, low-quality Chinese tyres.

“I don’t have the time at this hearing to fully explain or rebut some of the misconceptions about tyre retreading, but let me assure you that multiple State and Federal studies have looked into the safety, reliability, and performance of retreaded tyres. Each of these studies has reached the same conclusion: retreaded tyres do not cause rubber on the roads, retreaded tyres are safe and reliable products that go through rigorous testing and manufacturing processes, and retreaded tyres should be used in more applications to drive economic and environmental savings. Quality new tyre manufacturers are designing their truck tyres to be retreaded multiple times and are providing warranties for their customers that guarantee multiple retreads from their products. These low-cost, low-quality tyres from China cannot be retreaded and will start to create problems in the tyre recycling industries as well as creating local problems with illegal tyre dumping and tyre piles in landfill.

“I implore you to protect the thousands of hardworking men and women in these small to medium-sized businesses spread throughout the US from unfair competition and pricing by low-cost, low-quality Chinese tyre manufacturers and putting in place tariffs that meet the recommendations of the ITC study of between 23 per cent and 65 per cent. Thank you for your time and consideration.”