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April 19, 2018 02:00 AM

Tire cord makers seek exemption from tariffs

Bruce Davis
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    Michael McCrady

    WASHINGTON—Tire cord producers Bekaert Corp., Kiswire America and Tokusen U.S.A. Inc. have requested a blanket exemption to the U.S.'s Section 232 steel tariffs for grade 1078 and above high-carbon wire rod.

    The companies—all subsidiaries of non-U.S.-headquartered companies—pointed out in their submission that finished tire cord is exempted in the Section 232, setting up a scenario in which U.S. tire manufacturers will become more dependent on imported tire cord, "seriously undermining" President Trump's objectives in imposing the tariffs.

    The companies submitted their request recently to the U.S. Bureau of Industry and Security (BIS), a U.S Commerce Department office that oversees exemptions.

    The U.S. government first proposed imposing import tariffs on steel using the Section 232 protections in early 2017. At that time the U.S. Tire Manufacturers Association urged the Commerce Department to consider excluding specific types of tire cord-quality steel wire rod from the tariffs.

    Domestic suppliers cannot meet the demand of U.S. tire manufacturers for these steel products, Tracey L. Norberg, USTMA senior vice president and general counsel, said at a May 24 Commerce hearing.

    High-carbon wire rod, which is necessary to make the steel wire used in producing tire cord and bead wire, must be made in basic oxygen furnace steel works for required strength and cleanliness, the companies said, and is not available from U.S. rod mills, which use electric-arc furnaces,

    These three companies—along with Bridgestone Americas Inc.'s Metalpha unit—comprise nearly all of the tire cord capacity in the U.S.

    In the companies' submission, they note that the regulation governing the exclusion of products from the Section 232 duties provides that an article will be granted an exclusion only if an article is not produced in the U.S. "in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for a specific national security consideration."

    They also point out that the Department of Defense noted in its statements regarding the Section 232 duties that "tire rod steel used in military vehicles and trucks" is among the products for which it has no domestic suppliers.

    The companies claim in the submission that being forced to pay the 25 percent tariff would result in all of their tire cord wire production being transferred out of the U.S., resulting in the loss of thousands of "high-paying" U.S. manufacturing jobs.

    Bekaert operates five North American plants, Kiswire operates two, and Tokusen operates one, jointly employing 1,700 workers, the letter to the BIS said.

    Bekaert said it consumed about 55,000 tons of steel rod annually from 2015-17.

    Bekaert is a unit of Bekaert N.V. of Belgium; Kiswire is a subsidiary of Kiswire Ltd. of South Korea; Tokusen U.S.A. is a subsidiary of Tokusen Kogyo Ltd. of Japan.

    In the submission, it's disclosed that both Bekaert and Kiswire have put on hold planned capacity expansions because of the imposition of the Section 232 tariffs.

    It's not known why Bridgestone Metalpha was not part of this submission, nor whether Metalpha has filed a separate petition.

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