The effect of tariffs and duties on the tire and rubber product industries is still debatable, because they are so new. But they portend nothing good.
President Trump announced 25 percent tariffs on imported steel and 10 percent tariffs on imported aluminum March 8. Canadian and Mexican imports were provisionally exempted almost immediately, with promises for further exemptions for the European Union, South Korea and other countries.
But there was no exemption for tire-quality steel wire rod, as the U.S. Tire Manufacturers Association requested. And the problem was compounded March 26 when the U.S. Department of Commerce levied stiff antidumping duties against 10 countries that import steel wire rod to the U.S., including three—South Korea, Spain and the United Kingdom—that import tire-quality rod. The duties against steel wire rod imports from those three countries range from 11.08 to a whopping 147.63 percent.
Domestic tire makers, along with other industries dependent on imported wire rod, can apply to Commerce to obtain exemptions from the steel and aluminum tariffs, based on the importance of their product to national security. How liberal the government will be in granting these exemptions is yet to be seen.
Meanwhile, the Office of the U.S. Trade Representative has scheduled a May 15 hearing on the list of 1,200 products imported from China that it released March 22. All these products, USTR said, are potentially facing 25 percent tariffs.
At least 10 product categories—including tubes, pipes, hoses, aircraft tires, retread tires, retread rubber and machines for planing, milling or molding hard rubber—have the potential to affect domestic companies dependent on those products.
Also, the Chinese government has issued its own list of U.S. goods that may face Chinese tariffs. The list includes automobiles and aircraft, which obviously would affect U.S. tire and rubber product manufacturers.
Furthermore, China also has announced tariffs on styrene imports from the U.S., South Korea and Taiwan, pushing Chinese styrene prices higher, according to the consulting firm Wood Mackenzie.
The full effect of these actions will become apparent in the next several months. It will not be a pleasant wait.