In May this year, the European Union introduced a provisional anti-dumping duty on Chinese tires for trucks and buses. The new regulation covers only some brands, but European distributors are afraid that it may lead to a shortage of truck tires on the market.
In 2017, the coalition against unfair tyres imports filed a complaint with the European Commission to determine whether tires from the People’s Republic of China are not sold at prices lower than in the country of origin or even lower than the cost of their production. Such practices in the European Union are considered as dumping and are not allowed.
The Commission does not allow to flood the EU market with cheap counterparts from China
The Commission finally established that the Chinese producers were in fact engaged in unfair practices and introduced Regulation 2018/683 on 7 May. It imposes a duty on selected brands, which in some cases amounts to almost 70 percent of the price of a tire. Such high rates will apply for six months, after which the Antidumping Commission will issue its final definition on the duty.
|Company||Dumping margin (%)||Injury margin (%)||Provisional antidumping duty (%)|
|Other cooperating companies||110,3||40,2||40,2|
|All other companies||166,7||68,8||68,8|
The new duty will hit the pockets of entrepreneurs and carriers
The Irish Tyre Industry Association (ITIA) fears that the new law may lead to the lack of truck tires on the market. According to Irish portal HGVireland.com, small and medium-sized wholesalers and retailers, who often import tires straight from China, have seen a cost increase of between 80 and 100 percent. The prices went up from 52.85 to 82.17 euros per tire. As it turns out, the law has retroactive effect, so the entrepreneurs who purchased larger batches of tires before entering the new regulation are also forced to pay the duty and, as a consequence, sell the tires at a much higher price.
“We are very worried for members that currently have stock of Chinese tyres because the charges announced recently are due to be applied retroactively, which means that businesses will face significant cashflow difficulties if they receive a significant bill for tyres already sold. Also, there is no certainty on the date for retroactive charges which means our members are even afraid to sell tyres they already have in stock as they are not sure at what price to charge” – comments Paddy Murphy, president of ITIA for HGVireland.com.
|Company||Provisional anti-dumping duty (in EUR/item)|
|Xingyuan Tire Group Ltd., Co.; Guangrao Xinhongyuan Tyre Co., Ltd.||82,17|
|Giti Tire (Anhui) Company Ltd.; Giti Tire (Fujian) Company, Ltd; Giti Tire (Hualin) Company Ltd.; Giti Tire (Yinchuan) Company, Ltd.||57,42|
|Aeolus Tyre Co., Ltd; Chonche Auto Double Happiness Tyre Corp., Ltd; Qingdao Yellow Sea Rubber Co., Ltd; Pirelli Tyre Co, Ltd||64,13|
|Chongqing Hankook Tire Co., Ltd.; Jiangsu Hankook Tire Co., Ltd.;||52,85|
|Other cooperating companies listed in the Annex||62,79|
|All other companies||82,17|
There may be not enough tires on the market
Moreover, the companies were also forced to break advantageous contracts with suppliers from China, because after the introduction of anti-dumping duties they ceased to be profitable. Companies have started to look for tires in European markets that have suddenly become competitive with Chinese counterparts. In turn, European manufacturers were not prepared for such increases in demand for tires. Because there won’t be enough tires, prices will go up.
Our members are likely to have to increase prices in light of this regulation and unfortunately this will have a knock-on effect for many Irish road haulage and public transport companies which in turn will ultimately impact the consumer. To mitigate this as best we can, we are urging the EU Commission to consider the impact that this regulation will have on the competitiveness of Irish SMEs when deliberating on applying these charges retroactively” – adds Murphy.