How offshoring helps Chinese tyre exporters cope with new US tariff blows

Chinese tyre manufacturers, especially those with overseas facilities close to key Western markets, could emerge stronger from the global tariff war as consumers switch to cheaper alternatives, according to analysts.

The US will impose a uniform 25 per cent duty on all imports of automobile parts on May 3, which could lead American consumers to consider cheaper Chinese brands for their replacement tyres.

“Due to lower prices, Chinese brands will have an edge over European, Japanese and South Korean rivals for the same effectiveness,” Zhang Tingzhou and Song Tingting, analysts at Huatai Securities, said in a report.

Higher-priced global brands like France’s Michelin and Japan’s Bridgestone, which have a higher sales exposure to the US market, are thus more vulnerable to margin erosion, they noted.

The US imported tyres from Thailand at US$38 each on average last year, compared with US$79 from Japan and US$177 from France, the analysts said, citing data from the US International Trade Commission and business-to-business e-commerce platform SimpleTire.

Export-oriented Chinese producers, already subject to US anti-dumping and countervailing duties on heavy-duty tyres totalling 30 to 86 per cent since 2019, have invested in factories in Southeast Asia over the past decade to globalise their production and mitigate increasingly hostile trade policies.

  

​Read More