Bridgestone Corp., the world’s largest maker of tires with operations in Akron, is preparing for increased competition after a 25 percent punitive duty imposed by the U.S. against Chinese tires expired on Sept. 26, the company said.
China’s Hangzhou Zhongce Rubber Co., the nation’s largest tire maker, said it’s ready to boost its exports to the U.S., said Ni Guoliang, head of the company’s general office.
The end of the tariffs means Chinese producers will compete in the U.S. without the tariffs for the first time in three years.
President Barack Obama began imposing tariffs on $1.8 billion of Chinese auto tires in 2009, acting on a United Steelworkers union complaint that surging imports were pushing U.S. factory workers out of jobs.
“With the tariff gone, Chinese tire makers will be able to increase exports to the U.S.,” said Lee Sang Hyun, an automotive analyst at NH Investment & Securities Co. in Seoul, South Korea. “This, in turn, will ease the hyper competitiveness in the Chinese market.”
Chinese tire makers such as closely held Hangzhou Zhongce faced a 35 percent tariff in 2009 that was lowered by 5 percentage points each year.
The end of the punitive duties mean higher overseas sales. Exports to the U.S. could recover to about 70 percent of levels last seen in 2008, said Hangzhou Zhongce’s Ni.
“We’ve been preparing for the tariff expiration for some time,” Ni said in a phone interview Thursday.
The end of tariffs is “bullish” for China’s tire industry, said Li Zhongxing, vice general manager at Qingdao Segrift International Logistics Co., a unit of Shanghai-traded Sailun Co.
Most car tire plants are already running at full capacity catering to domestic demand, limiting their ability to boost production for exports, Li said.
The tariffs had driven up industry prices by 10 percent to 15 percent and mainly benefited South Korean tire makers, Bret Jordan, an analyst at BB&T Capital Markets in Boston, wrote in a report this week.
“There will be an impact on the entire market,” said Yuki Kawasoe, a spokesman at Bridgestone. “We will work to boost efficiency and cut costs to maintain competitiveness.”
Sumitomo Rubber Industries Ltd., Japan’s third-largest tire maker, has no plans to introduce discounts or cheaper products to counter the expected increase in competition from Chinese exports, said Kumiko Makino, a spokeswoman for the Japanese company.
The tire maker, which gets about 12 percent of its sales from North America, plans to maintain its competitiveness with “quality products and services,” Makino said, without elaborating.