Manufacturers worldwide will be eagerly following the next stage of an escalating trade dispute between the United States. and China regarding vehicle tyre exports. Last week, President Barack Obama agreed to impose three-year tariffs on the import of all light truck tyres from China.
The tariffs have infuriated China, which responded by calling the move an “act of trade protectionism.” In addition, China says it will conduct its own investigation regarding “anti-dumping and anti-subsidies” of some automobile and chicken products originally produced in the United States. China is also referring the tyre tariffs case to the World Trade Organisation, of which it became a member in late 2001.
The dangers of this dispute escalating into a real trade war are real, particularly as US media is reporting that other industrial sectors in the United States are also lobbying for similar protective measures against cheaper and, often, subsidised Chinese imports that are resulting in slashed margins and job losses. If this happens, China will be forced to transfer its export focus elsewhere for products that attract imports tariffs into the United States. The Chinese government has already said that tyre exports will now be concentrated on the ASEAN countries, Africa, Eastern Europe, the Middle East and South East Asia. Manufacturers and distributors already operating in those markets should prepare for stiffer price and product competition in the coming months.
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