When China and friends took over
The year is 2024. Consumer tire imports from China are way down compared to 10 years ago.
In 2013, a then record 51.4 million of them were shipped to the United States, representing 30% of total imports. That was too much for the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, which, to avoid the unwieldy acronym of USPFRMEAISW, was more commonly known as the United Steelworkers, or USW.
The USW complained, and the government listened. Claiming the number of Chinese imports materially injured the tire industry, the U.S. International Trade Commission (ITC) ruled in favor of imposing an additional 88% tariff on them in 2015.
The number of consumer imports from China dropped immediately, from 65 million, representing 34% of total imports, in 2014 to less than half that within two years.
Because the vast majority of the imports were low-cost radials, there wasn’t enough supply to meet demand. Domestic tire manufacturers, experiencing what is now referred to as their “Golden Age of Prosperity,” had previously given up on producing loss leaders, and were in no hurry to ramp up their plants to do so again.
Tire pricing skyrocketed as a result. Low-cost radials were affected first; then all tire prices were raised in order to give consumers good-better-best options. By 2017, with pre-tariff inventories having long since been depleted, a set of P205/65R16 replacement tires for a Toyota Camry cost a minimum of $600.
Ford Mustang owners had to shell out $936 for four P215/65R17 tires. The cost to outfit a Corvette ZR1 with new tires? $3,600.
Tire costs were so high and tire manufacturers so flush with cash that even today, historians debate whether or not to refer to the period as the “Platinum Age of Prosperity” instead.
The same thing had happened in 2009, although not to the same degree, when the 35% tariff on Chinese passenger and light truck tires went into effect. While imports from China dramatically decreased, tire prices increased some 30%. The price increases might have been even higher if not for low-cost manufacturing in Southeast Asia. Tire exports from countries such as Thailand, Indonesia and Vietnam helped fill the gap created by the tariff.
However, implementing the 88% tariff caused two major events in the U.S. tire industry. First, tire manufacturers from China and Southeast Asia started building plants here in the states. Second, the union suffered through an identity crisis.
Singapore-based Giti Tire Group proved farsighted with its consumer tire plant in Chester County, S.C. The company announced it was building the facility in 2014, before possible tariffs became an issue. Now it has two plants in the U.S., both in South Carolina.
Others from Asia followed suit, including Triangle Tyre Co. Ltd. After years of trying to make Triangle “the Chinese brand of choice” in the U.S. from its home base in Shandong, the company built a plant in South Carolina.
By 2020, five more Chinese tire makers had opened plants in the Americas. Four of them were built in South Carolina; the other was built in Mexico, reportedly because there was no undeveloped land left in South Carolina.
As for the former USW, the tire tariff its leaders championed indirectly led to its undoing. Faced with stiff competition from transplanted tire companies, domestic manufacturers with union plants were forced to look for more amenable locations.
Not surprisingly, the contract negotiations in 2017 were very contentious. When those contracts ran out in 2021, despite the hue and cry and posturing of the USW’s leaders, every tire plant was stationed in one of the 21 Right to Work states. And every major tire manufacturer was represented in one of those states.
Faced with a declining membership, the USW folded into the American Federation of Labor–Congress of Industrial Organizations (AFL-CIO). The name of the organization was not changed.
Ironically, the Chinese companies decided against manufacturing low-cost radials in the U.S. because they weren’t profitable. That led to an influx of consumer tire imports from Southeast Asia. Nobody cared, however, because supply was satisfying demand. Unemployment was down. The economy was booming. And those endless emails from unknown Chinese tire companies offering their trailer or winter tires at cut-rate prices stopped.
China and friends had become the leaders of our industry, if only out of necessity. And life was good. ■
If you have any questions or comments, please email me at email@example.com.
To read more of Bob Ulrich's editorials, see: