Saul Ludwig, a managing director at Northcoast Research Holdings LLC, expects the 25% Chinese tariff on consumer tires imported from China to end this year. And one of the big winners will be Cooper Tire & Rubber Co.
"The coming end of the Chinese tariffs on Sept. 27, 2012, is more likely to be a plus for Cooper than a minus," he says.
"The tire importers we speak with tell us that the recent buzz in China is that tire producers may increase tire prices -- both for tires sold in China as well as those exported -- by about 10% when the 25% tariff comes off."
Although that would be a net price reduction for importers, in reality, it would still be a price hike.
Cooper imports about three million tires from China, according to Ludwig. So if the tariff is eliminated, "it would be a plus for Cooper’s profits on its imported tires."
Ludwig recently reinforced a "Buy" rating on Cooper's stock price. For more information, click on "Goodyear and Cooper stocks remain a good 'Buy'."
