Tires Squeal as Trade Cases Get Grip On Chinese Exports — Panjiva
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Tires Squeal as Trade Cases Get Grip On Chinese Exports

China 2979 Cons. Discr. - Autos 1186 South Korea 581 Tariffs 1801 Thailand 134 Trade Deals 1000 U.S. 5325 USMCA 456

U.S. trade in tires may become a focus for the incoming administration. Total trade ( imports plus exports) in tires of all types totalled $17.7 billion in the past 12 months, Panjiva data shows, a 7.8% reduction on the same period a year earlier. Notably U.S. exports have declined continually on a month-on-month basis for the past 20 months through September 30. Imports have done better, but have still fallen in seven of the nine months for which data is available this year.

There is a significant involvement of China (17.3% of U.S. imports) and NAFTA partners Canada (12.1%) and Mexico (5.5%). While a more hawkish stance from the new administration is likely, the U.S. has already implemented significant anti-dumping and countervailing subsidy duties against China in two cases in the past 18 months.

TREAD WEARING ON $18 BILLION OF TRADE

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Chart combines data for U.S. imports and exports Source: Panjiva

Imports of tires for autos (as distinct from trucks and buses) have fallen 7.5% in the third quarter and by 6.2% in the past year on 12 months earlier. The main losers have been exporters from China, who experienced a 54.8% slump. This was the result of tariffs applied by the Department of Commerce in a case against GITI Tire from August 2015.

Shipment data through October shows imports were unchanged on a year earlier as Chinese exporters actually delivered a rebound of 154% at the expense of Japanese shippers. This is likely just a basis effect though rather than indicating a new trend. The largest shippers over the past 12 months have nonetheless been based in Japan including Toyo Tire, Yokohama Rubber and Bridgestone Corp.

CHINA’S CAR TIRE EXPORTS BOUNCE, JAPAN’S DEFLATE

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Chart combines data for imports in dollars through September 2016, shipments in TEUs (dotted line) for October 2016 Source: Panjiva

A similar picture can be seen for imports of truck and bus tires. There has been a 12.2% drop in imports in the three months to September 30 vs. a year earlier, led by a 63.3% slump in exports from China. This reflects cases brought against Double Coin Holdings and Guizhou Tire on a countervailing duty and antidumping basis, where final decisions are due in December and January. These were only brought on specific types of tires, which accounted for 83% of China’s exports to the U.S. of bus and truck tires, but only 26.7% of all imports by the U.S.

Shipments in October show the main winners from China’s decline have been shippers based in Thailand (46.1% growth on a year earlier), South Korea (35.6%), and Canada (5.3%).

DOUBLE COIN TRUCK TIRE EXPORTS SPENT

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Chart combines data for imports in dollars through September 2016, shipments in TEUs for October 2016 Source: Panjiva

The U.S. runs a net deficit in tires of $8.3 billion a year – although it does export $4.7 billion – making it more likely that it would be an area where negotiators would be hawkish. That would particularly apply to China, even allowing for the recent cases referred to and a 48.1% drop in the U.S. ‘tire deficit’ with China in the three months to September 30 on a year earlier.

A similar attitude may be taken towards Japan and South Korea in any bilateral deals that President-elect Trump has referred to. Yet, the U.S. runs a net surplus with NAFTA partners Canada and Mexico of $935 million a year. As with autoparts, discussed in Panjiva research of November 9, this could limit the new administration’s ability to get the deal it wants.

A TIRED TALE OF TWO HALVES – NAFTA AND THE WORLD

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Chart combines data for imports and exports, segmented by country to show net surplus (deficit) held by U.S. across all tire products (HS 4011) Source: Panjiva

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