By on July 15, 2015

The United States International Trade Commission issued a split 3-3 ruling on a petition regarding Chinese tires filed by the United Steel Workers under U.S. Antidumping and Countervailing Duty (AD/CVD) laws. That means that — in all likelihood — the United States will put tariffs or other controls on tires imported from China. Counterintuitively, not one of the nine domestic American tire companies that produce 100 percent of the tires made here supports the AD/CVD petition.

Don Ikenson at Forbes explains the domestic tire producers’ lack of support for the ruling is due to the steel workers union not really being interested in stopping Chinese imports, but rather gaining power to use against their negotiating partners here in the United States.

The United Steel Workers represents about 40 percent of American tire workers. They were the sole petitioner that argued the domestic manufacturers are the victims of unfair trade. The problem with that argument: over the period of investigation, not only were all nine domestic producers profitable, but also that their profit margins increased at a better rate than either those of the automotive industry or the entire manufacturing sector.

The domestic tire industry is healthy. Capacity utilization in the industry during the investigation was right around 90 percent. To meet anticipated demands, three new entrants in the U.S. tire market will be spending $1.75 billion on new tire factories in the United States. Goodyear has announced $500 million in plant expansions — and that’s on top of $2.4 billion the domestic producers have recently invested in capital improvements.

That hardly sounds like an industry that’s suffering from unfair trade.

Part of the health of the domestic tire producers is because they don’t directly compete with Chinese tires. Domestic producers decided a while ago to focus on premium OEM and replacement tires, leaving the budget and economy side of the business to Chinese producers willing to exchange margins for volume. At the same time, eight of the nine domestic producers make their low-cost tires overseas. The controls on imports wouldn’t help the domestics sell the tires they make in the United States and also make it more expensive to import cheaper tires from China.

Jobs wouldn’t be protected in the United States, according to Ikenson. While it might affect Chinese production, the importers would just switch to tires supplied from Indonesia, Mexico or Brazil.

Why, then, would the USW file the petition in the first place? Leverage.

If the trade commission puts measures to fix the supposedly unfair situation in place, they’ll be in effect for five years unless — and this is a very big unless — the petitioners — i.e. the union — are willing to let the “trade remedies” be revoked. Not only does that give the union a bargaining chip when negotiating new domestic contracts, but also by filing the petition the steel workers’ union has managed to wedge itself into having a say in the domestic tire companies’ global production strategies.

(Note: The historical film was made in the 1930s for Brunswick Tires, which was owned by the corporation more famous for its billiard and bowling equipment.)

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can get a parallax view at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options.

Get the latest TTAC e-Newsletter!

43 Comments on “US Tire Makers Oppose New Restrictions On Chinese Tires – It’s A Union Thing...”


  • avatar

    While China can’t actually “walk” into America and seize the debt we owe them, they can make it so that just about everything we buy comes from there. And as soon as it breaks – which it will, we just rebuy again and again and again…

    This economy is suffering because of lack of factory jobs for our low-end workers. Without those, they contribute/produce NOTHING but more welfare roles.

    There seems to be a well-oiled and concerted effort to make America as unproductive and as addicted to consumerism as possible. I fear the only way we will break free is a benevolent dictator.

    • 0 avatar
      Advance_92

      How about the Pope?

    • 0 avatar
      Superdessucke

      100% agree with you, but the point of this article is that the USW is doing this for leverage, not to protect or create U.S. jobs. The tariff on China just means that our cheap tires will come from other low wage countries.

      But, then again, is it really correct to say that this won’t protect U.S. jobs? The USW probably anticipates that the 9 domestic tire companies want to start manufacturing tires in China and import them here to save money, just like many other auto part suppliers have done. Sure there are other low wage countries where tires could come from, but I’m sure they are less attractive than China from an infrastructure and bargaining perspective.

      So now, with the tariff in place, they will have to bargain with the USW in order to implement this “global strategy” (i.e. shift U.S. jobs to China to save costs while the rest of us jamokes get to pay higher taxes to support the displaced workers and roll to our shrinking wage jobs on lower quality tires). Without this, tire production would simply gradually shift over to China with no say from the workers.

    • 0 avatar
      Xeranar

      A.) China owns about a 1/3rd of US debt, while they’re the largest single owner they’re far from the largest group. That designation would belong to US citizens and US-based corporations/partnerships/funds.

      B.) The only risk of default in debt is not being able to borrow more. This is actually not an issue for a country like the US or any Western European country because our actual GDP could easily cover our spending habits. We just choose to keep taxes low for rather stupid reasons.

      C.) I actually agree that low-end factory jobs are a good source of income in any society but as long as we keep trade barriers exceptionally low and make zero effort to improve world-wide standards of living there is no reason for any corporation that can ship products overseas and keep trade barriers down to pay a US worker a living wage when they can employ the Chinese slave ownership system to work individuals for a quarter of that. It’s simply a business strategy that works because we’re too stupid to cut them off at the knees.

      Honestly though, we’re closer to changing the system than we have been since the 1940s. Really this is China’s big run-up to taking over the world economy but they still rely immensely on exportation and keeping about 100-200 million workers at the edge of slavery to keep their economy up. If the US turned towards a western Europe model of capitalism (i.e. heavily restrained with human rights at the forefront) it would give the salivating nationalists what they want while also making income equality go down.

      • 0 avatar
        CJinSD

        Actually, it won’t take much of a real interest rate to raise debt maintenance above tax receipts, at which point borrowing more will have to be done to pay interest as well as to cover any government spending. When that happens, the only people buying our paper will be people that are buying themselves a few more seconds of civilization. Higher taxes will contract the economy, speeding up the process precipitously. There are plenty of people that think the collapse will be a good thing, but they’re not the sort of people that should be trusted.

        • 0 avatar
          Xeranar

          Except that raising taxes to Eisenhower levels didn’t collapse the economy. In fact, it’s been shown that raising taxes has next to no impact on the economy except at the highest levels or a large tax burden is put on the lowest levels which cuts down on consumer spending. If the transfer is downward the economy will expand most likely.

          Simple concepts that seem to elude most of the cast here…

          • 0 avatar
            Lorenzo

            Eisenhower tax levels were loaded with loopholes. NOBODY paid that 90% top rate.

            BTW the Chinese own US government bonds. The issuer just rolls over the debt as it comes due by paying off mature bonds with money from newly issued bonds. The Chinese are getting their money back, and investing it back in more bonds. When they stop doing that, someone else will buy the bonds.

  • avatar
    Pch101

    There’s a domestic tire industry? The only significant US players are Goodyear (which also owns Dunlop) and Cooper. And Cooper would have had Indian overlords had the Apollo deal not imploded.

    In any case, they’re all multinational companies. Borders are for little people.

    • 0 avatar
      APaGttH

      This.

      I had no idea there were still 9 domestic tire makers of any significance left in the United States.

      made tires are generally crap anyway. CR did a review and concluded that not only were most of them steaming piles, but when you did the math on tread life they typically ended up costing more than an entry level tire from a mainstream brand.

      I think the trillion dollar question for the United States as globalization continues to take over is how do we strike a balance between fair wages for honest work and our appetite for cheap goods.

      Chest pounding protectionism isn’t the answer, but neither is the other extreme of near total deregulation of import/export, healthcare, wages, safety, etc. Both “solutions” are just races to the bottom for different reasons (with different impacts of course)

      • 0 avatar
        28-Cars-Later

        I would want to see data, but how “cheap” are these goods vs wages, and what is the margin on product, say tires, vs margin two decades ago? So in the case of tires, I’m pretty sure steel belted tires were the norm by 1995 so what did tires cost then vs now and is the overall product of better or lesser quality today?

    • 0 avatar

      Regardless of where the companies that operate them are owned, there are nine companies that make tires in the United States. They employ thousands of people. I’d call that a domestic tire industry.

      It interesting that while the Forbes piece says that the U.S. tire producers have concentrated on premium tires, the Dunlop Direzzas that I have on my Saturn were made in Indonesia.

      • 0 avatar
        Pch101

        So it’s supposed to be a surprise that a company such as the Japanese Bridgestone, the French Michelin and the German Continental would not want US import tariffs? They want to have their own import operations, so of course they wouldn’t want them.

    • 0 avatar
      Compaq Deskpro

      I’m actually surprised by this. I said “what about Bridgestone and Michelin”, turns out they are Japanese and French, even though my Michelin tires proudly state they are made in the USA. Tires are so global its not even funny.

      • 0 avatar
        qfrog

        Bingo.

        I have seen Continental tires made in Brazil, Germany and Slovakia. I’m certain I have seen others too, just can’t remember them at the moment.

  • avatar
    redmondjp

    I go out of my way to avoid Chinese-made tires. I have seen too many of them fail (in unusual ways) prematurely. And the off-brand ones seem to start checking/cracking the moment you drive out of the tire store parking lot.

    Just about every tire now sold at Les Schwab is now made in China (and ol’ Les himself would be spinning in his grave if he knew this).

    • 0 avatar
      JohnTaurus_3.0_AX4N

      As do I. I put Chinese tires on my Tempo GLS a few years ago, and had an alignment done the very same day. Six months later, the tires were heavily worn in unusual places. This didnt occur on the tires that were previously on the GLS, even before the alignment when it still had bad tie rods (which I replaced, thus the reason for the alignment and new tires).

      I recently put a set of Firestone FR710s on the Taurus (that I believe were made in Brazil but am not sure). I usually go with GoodYear, but I got a too-good-to-pass-up deal on them. So far, Im satisfied with them. For one thing, they dont squeel like Im doing 150 mph around a corner that has new pavement. The tires that were on the wheels I bought used for my Taurus were Michelin (the set came from a 2006 Taurus), I believe, and suffered from weather cracking which is what prompted me to replace them.

      Since that episode with the GLS and an earlier instance on my 99 Saturn, I will not put Chinese tires on my cars again.

    • 0 avatar
      brn

      Give them time.

      Like most things, China makes garbage at first. We continue to move manufacturing to China and continue to teach them how to improve quality. They eventually learn to do it on their own. Because they control both their manufacturing and our manufacturing, they are able to put us out of business.

      This has happened before with other countries. Unfortunately, companies (because people like you and I indirectly demand it) are too concerned with today’s profits that they frequently ignore long term effects.

      We never learn.

  • avatar
    Superdessucke

    China is like Darwin. It is weeding out the weak from our herd, both workers who have limited skills and those who would buy tires from a country which can’t even make a car charger that lasts more than a couple months to save a few bucks.

    The latter is fine by me. Unfortunately, we all have to pay more and more to support the former, which is a big problem.

    • 0 avatar
      PeriSoft

      “and those who would buy tires from a country which can’t even make a car charger that lasts more than a couple months…”

      This sounds good on the surface, but I’d also prefer not to be skidded into in the wet by someone whose only tire-purchasing qualification was “round and black”.

  • avatar
    sirwired

    I don’t see it as a contradiction at all the the USW is supporting a dumping petition, while the tire manufacturers that happen to have domestic operations do not.

    The tiremakers clearly profit from the tires they import from China, and it’s perfectly reasonable for them to not care about much of the production moving abroad; they make the money either way.

    • 0 avatar
      Xeranar

      Exactly. I was going to write a response that essentially stated the same. There is no reason why a multi-national company that would form an alliance with overseas manufacturers to re-brand Chinese tires would care if they’re getting cheap tires. If anything this is about large corporations getting the upper-hand on workers vs. worker’s fighting back with the few tools they have to save themselves from said large corporations.

  • avatar
    Land Ark

    I’m presently sitting on my tinfoil hat because otherwise I would go off on what I think of the whole tire cartel. From pointing out what 28-cars-later mentioned about the manufacturing process not changing in 20 years yet prices keep exponentially going up – to the fact that I’m convinced there is technology available to make an air-less tires that they have suppressed to maintain profits.

    But, I’ll just keep my mouth shut and get outta here.

    • 0 avatar
      JohnTaurus_3.0_AX4N

      Well, lower profile tires are more popular now, as are larger sizes. In 1995, a midsize sedan likely came with 15″ tires, some had 14″. And they were usually baloon tires with tall sidewalls. Since the average car’s performance has improved, they require larger, lower profile tires.

      Take the Taurus for example. Early models had 14″ tires, 15″ were optional. In 1994, 14″ gave way to 15″ as standard, which lasted until 1999 when 16″ became standard due to larger front brake rotors on the new-for-2000 model.

      Today, 16″ is probably the smallest you can get on an average midsize, with higher trims coming with 17″ or 18″ tires. Tires of that size were unheard of on 1995 midsize family sedans. Hell, even a base model V-6 Mustangs had 15″ tires in the 1990s IIRC.

      Stands to reason that larger, but lower profile, tires cost more than the old baloon tires of 20-30 years ago. Im sure prices for smaller tires (14″, 15″) are higher as well, but so is fuel, food, electronics, pretty much everything.

      • 0 avatar
        Land Ark

        A totally valid point.
        Though I would argue that low profile tires have been fairly common for the past decade or so – I know my 2004 built Scion tC came with 17″ wheels and rubber band tires. I’d think that over 10 years of constant production they could have paid for the technology. And I also bought a set of low profile tires on my car back in 1998 when Super Street magazine was a thing people paid attention to.

        Plus the wide sidewall tires for my Tacoma with 16″ wheels aren’t that much cheaper than low-pros and the ones I look at are basically touring tires, nothing for off road.

        Again, I realize it’s nonsense and the cost of everything is presently inflating out of control. But for whatever reason tires just get me more than anything else (besides used car prices currently).

        • 0 avatar
          PeriSoft

          “Again, I realize it’s nonsense and the cost of everything is presently inflating out of control.”

          Core inflation in the UK just dropped to zero. The Euro is nearly in a state of deflation. US inflation for the last three years has been 1.7, 1.5, and .8% respectively. The general target for central banks to keep economies healthy is around 2%. We have too little inflation, not too much, and certainly nowhere in anyone’s wildest imagination is it “out of control” – unless you’re referring to its uncontrolled *collapse*.

        • 0 avatar
          benders

          Smaller sidewalls mean a smaller air chamber to carry the load and therefore requires a more expensive design. Not really an investment that can be capitalized over time; every low-profile tire is going to be more expensive than an equivalent higher aspect ratio tire (unless you also built the high aspect ratio tire with the expensive design to save on the number of components in the factory).

    • 0 avatar
      benders

      Tires have vastly improved over the last 20 years. The most notable change is silica filler instead of carbon black. But silica requires additional mixing steps and wears out equipment much faster because it is more abrasive. So it’s not just tire manufacturers banking your money.

      As for airless tires, they don’t handle imperfections well. They’re working OK for low speed, off road stuff but highway speeds aren’t possible right now. Besides, I don’t know why you think they will save you lots of money, the tread rubber is going to wear just as fast.

    • 0 avatar
      Advance_92

      205-55-R16 tires haven’t really gone up in price over the last fifteen years, but the number of cars that need 17-plus inch tires is huge so I’d guess a lot of the new price is in these big sizes and whatever is needed to make such tiny sidewalls work.

  • avatar
    Felix Hoenikker

    Speaking of Chinese made parts, I have a related story. This summer, I have been rehabbing the front suspension of my old MB 450SL. All of the suspension parts that I purchased from my usual website are Euro OEM. However, I decided to buy brake hoses from Rock Auto for a very attractive price. Nowhere did it mention the word “import” that is usually their code work for “made in China”.
    The brake hoses were indeed made in China. When I installed the front brake hoses, I stripped the threads on one of them where it connects to the steel brake line at the top of the wheel well even though I started the threads by hand. When I examined the threads, I found that they that the metal female fitting was very soft compared to the old one I removed. Hence, the ease of tightening the flare fitting when cross threaded.
    This week, I ordered a rebuilt alternator with lifetime warranty from Autozone using a 20% off promotion for online sales. I needed to buy something else to make the $100 minimum for the discount and free shipping so I decided to order a Duralast brand brake hose to replace the one I stripped.
    The new brake hose came today. It looked very familiar so I grabbed the one that I had stripped. Exactly the same thing down to the markings on the hose. As with the Rock Auto part, there was no mention on the Autozone site that the brake hose was imported from China. Besides, the OEM parts are imported from Germany so seeing the word import is normal for this car.
    It’s getting more difficult to tell the country of origin of auto parts from the mass marketers. At least with tires, it’s stamped into the sidewall.

    • 0 avatar
      qfrog

      Assume everything is made in China even your frozen veggies at the supermarket. Be impressed and relieved when you see a product that isn’t made in China, PRC, ROC or whatever other obfuscation is used to subtly inform you that what you’re buying might be dangerously cheap and made to no particular quality standard other than new.

    • 0 avatar
      Felix Hoenikker

      I’m not condemning the quality of all Chinese goods per se. Hey, I’ve bought my share of tools at HF and have generally had good service. The few instances where the tool failed, HF replaced it for free.

      However, in this case, I would have gladly paid the extra $0.25 extra for a properly hardened fitting. The real problem is the inevitable corner cutting that goes on with Chinese sub contractors once the contracts are signed.

  • avatar
    Xeranar

    Ah yes, the ‘what’s good for the goose is not good for the gander’ argument. TTAC: Supporter of billion dollar corporations, hater of individual workers. All in the name of some imaginary ethos of ‘free market’ or whatever they’re calling it this week.

    The major tire players are going to import tires from China because China isn’t going to get a foothold here without their support. So lets not pretend this about open competition but rather collusion to drive down wages as a way to increase profit margins (not actual profits, they’re not planning on selling more tires, just selling them with a wider margin by taking that money off of workers).

  • avatar
    Drzhivago138

    In my experience, “Made in China” is no determiner of quality. I’ve had good, I’ve had bad. China will build exactly as cheaply or as well as the company will pay for.

  • avatar
    Spike_in_Brisbane

    I have some very quiet and comfortable (and quite expensive) Michelin Primacy 3 tyres on my Citroen. They were made in Thailand.

  • avatar
    SC5door

    As with Korea, the Chinese tire industry will catch up eventually.

    Not long ago I bet people wouldn’t have touched a “Made in Korea” tire….now they supply OEM tires for many manufacturers. (Hankook is to open a plant in Tennessee in 2016)

  • avatar
    taxman100

    I just bought some Kumho’s for my 16 year old beater. I figured at a minimum they were made in Korea. I had Pirellis made in Brazil that lasted 76,000 miles, but Pirelli is now owned by the Chicoms.

    Turns out the Kumhos were made in China. Outside of the economics, I’m not a big fan of Godless socialist, crony economies. I bought some Kelly’s last year for another car that were made in the United States – should have done that again.

    Then again, it is clear the United States government is a Godless, socialist entity as well, along with the vast majority of large multinational U.S. corporations. Management of both are loyal to only what benefits them – power, control, and their stock options.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • myllis: Fastest SD1, named Vitesse was called Saab Turbo and BMW killer in Germans autobahns. The Rover SD1 saw...
  • DenverMike: Pretending? Forget the medical benefits for a second. How about we don’t pretend the entire MJ...
  • mcs: @stuki: “And if you are racing, there are plenty of dragsters faster than 2sec to 60….” Yeah, but...
  • Inside Looking Out: The Fisrt Russian Revolution was actually January 22 not January 6 1905. That’s how it...
  • rolando: so say we all!

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber