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OTR Tariff Investigation Takes Another Step Forward

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The U.S. Department of Commerce (DOC) is initiating its own investigation of whether imported off-the-road tires from China, India and Sri Lanka have harmed the domestic industry.

On Feb. 4, 2016, the DOC announced it would pursue anti-dumping and countervailing investigations of imported tires from China and India, as well as a countervailing investigation of OTR tires from Sri Lanka.

The DOC’s investigation follows the start of a similar investigation by the International Trade Commission. Both agencies must investigate claims of a domestic industry being harmed by alleged dumping or subsidies before the U.S. government can impose tariffs.

The petition seeking the investigation was filed by Titan Tire Corp., a domestic producer of OTR tires, along with the United Steelworkers (USW.)

The ITC is scheduled to make its preliminary determination on the case by Feb. 22, 2016. If the ITC doesn’t find “reasonable indication” of dumping or subsidies, both the ITC and DOC investigations will be terminated.

For the anti-dumping investigation, dumping is when a foreign company sells a product in the U.S. at less than its fair value. Countervailing is when a foreign government provides financial subsidies to a company for the manufacturing of products and ties those subsidies to export performance.

The DOC says OTR tires are allegedly being dumped into the U.S. market at the following rates:

Country Dumping margin
China 11.20%-77.69%
India 10.77%-76.45%

The estimated subsidy (countervailing rates) are:

Country Subsidy rate
China Above de minimis*
India Above de minimis*
Sri Lanka Above de minimis*

*de minimis is defined as less than 1% for developed countries, less than 2% for developing countries.

If the ITC does find "reasonable indication" of dumping or subsidies for OTR tires, the DOC's investigation will continue. The DOC would then issue its preliminary countervailing determinations in April 2016, and its antidumping determinations in June 2016.

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