Trump Targets Asian Tire Imports in Final Month

Topics:  President Donald J. Trump

Ralph Jennings
Voice of America News
6 January 2021 08:27 AM

TAIPEI - An initial U.S. decision to place special import duties on automobile tires made in four Asian manufacturing hubs will jolt domestic industries while reinforcing President Donald Trump's tough foreign trade stance in his final days in office, analysts say.

The U.S. Department of Commerce said December 30 it had made “preliminary determinations” to levy duties on tires made for passenger vehicles and light trucks. Duties would affect exporters in South Korea, Taiwan, Thailand and Vietnam if the decision becomes final May 14 after a follow-up investigation, the department said on its website.

“Impacts from this matter are really, really big for Taiwan,” said Danny Ho, chief executive of the Taiwanese petrochemical consulting firm DMI.

In trade terms, dumping refers to the practice by countries or manufacturers of pricing goods entering a foreign market to less than that paid by domestic customers in the source country. U.S. Commerce department officials tentatively found that exporters have “dumped” tires in the United States, the website says.

The findings answer a petition from the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union.

Thailand most impacted

Thailand stands to be impacted because of its unusually large tire-making industry. U.S.-bound imports from the auto manufacturing sector led by American and Japanese investors were worth $1.96 billion in 2019, the U.S. commerce department says.

The automotive industry is one of Thailand’s five biggest employers and generates up to 2 million cars per year, said Richard Doner, retired political science professor at Emory University in the United States.

The duties “might severely impact that industry,” Doner said, though most finished goods are not shipped to the United States. “It’s not like Thailand relies totally on the United States, but it’s probably important and given the significance of the automotive industry for Thailand, it’s probably a big deal," he said.

Cheng Shin Tyre and Nankang Tyre, are Taiwan’s chief tire suppliers overseas, said Liang Kuo-yuan, president of the Polaris Research Institute, a policy group in Taipei. He estimated that Nankang gets 37% of revenues from U.S.-bound exports and fears high duty exposure because its factories are concentrated in Taiwan rather than in offshore locations that could avoid the tariffs.

Nankang did not answer a request for comment.

Taiwanese tire exporters may have deliberately lowered prices for the U.S. market to compensate for the lack of any low-tariff incentives from Washington, Ho said. Exporter peer South Korea entered into a free trade deal with the United States in 2012.

“The conclusion is that there’s no immediate impact, but from the Taiwanese perspective, if they’re found to have committed dumping activities, then it’s disadvantageous to all kinds of Taiwanese businesses that are returning onshore,” Liang said.

Vietnamese producers and American business people in the country oppose U.S. duties, said Nguyen Thanh Trung, Center for International Studies director at the University of Social Sciences and Humanities in Ho Chi Minh City.

“They are not satisfied with what the department is targeting in the tire making industry in Vietnam,” said Nguyen, who has spoken with some of the opponents. “They think ‘I have worked for these companies for long (periods) and I know how legitimate they are and how good they are, so it’s not rational to impose high tariffs on the industry.’”

South Korea’s tire imports to the United States reached $1.17 billion in 2019, followed by Vietnam at $469.6 million and Taiwan at $373 million, the commerce department says.

Trump’s legacy

“Strict enforcement” of U.S. trade law marked a “primary focus” of the Trump administration, the Commerce Department website said last week. During his term, the department has opened 306 new anti-dumping and countervailing duty investigations, a 278% increase over a "comparable period" of former President Barack Obama’s term.

Trump over the past four years withdrew the United States from the North American Free Trade Agreement with Canada and Mexico as well as from a now 11-nation Pacific Rim free trade region. Trump’s broader trade policy is “definitely” steering the proposal to impose tire duties, Ho said.

President-elect Joe Biden might turn the tire duty decision around, Nguyen said. Biden is due to take office January 20.