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August 03, 2018 02:00 AM

Editorial: Escalating trade wars likely to damage industry

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    Leo Michael

    Any part of the rubber and tire industry that may have felt left out of the tariffs and trade wars currently being waged between the U.S. and many of its largest trade partners—particularly China—likely won't anymore.

    That's because the Trump administration's proposal to place tariffs on $200 billion worth of goods imported from China covers virtually every type of tires imported from China, along with a laundry list of other rubber goods, dozens of types of natural and synthetic rubber, and a host of rubber accelerators and other chemicals.

    These proposed tariffs, coming on top of previous tariffs against China and other trading partners, have brought a whole host of protests from a variety of industry associations, both domestic and abroad.

    More than 2,200 associations, coalitions and individuals—including the Motor & Equipment Manufacturers Association and the European Tyre & Rubber Manufacturers Association—submitted comments on the administration's proposed imposition of tariffs on autos, trucks and vehicle parts. They warned of damage to the U.S. automotive industry, with MEMA saying with the global interconnectedness of the auto and auto parts industries, that damage to one likely will bring disruption to all.

    The new list of proposed trade actions is causing similar fear among U.S. tire producers. With NR and SR imports on the list, the U.S. Tire Manufacturers Association expressed concern that the measures will threaten stability in the supply chain, which they say is vital in maintaining the competitiveness of the growing domestic tire production footprint.

    Many tire and rubber goods producers will suffer under the higher cost of raw materials, and possible lower demand for their products because of the higher costs they must pass on.

    Some sectors in the tire industry, particularly retreaders, may find some benefits to the tariffs. The Tire Industry Association said the retreaders favor the action because they have been harmed by low-priced tire imports from China. The TIA's other constituents, tire distributors and dealers, though, say they need the low-cost imports to compete in the lower-priced end of the consumer tire market.

    In the extreme, the tariffs could even cause an eventual shortage of NR because some believe rubber smallholders in Southeast Asia will drop out of rubber growing rather than accept lower prices for their rubber.

    However the latest chapter in the trade wars play out, there's a good chance the nation's automotive, tire and rubber producers will see more losers than winners.

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    Rubber News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].

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