Recently, at a hearing before the Transportation Committee of the Chamber of Deputies of Brazil, the Brazil National Transportation Agency (ANTT) clearly opposed the increase in the import duty on tires from 16% to 35%.
ANTT said that the move will significantly increase the operating costs of truck drivers in Brazil and pose a major challenge to the sustainable operation of the industry; The Brazil National Tire Industry Association (ANIP), the applicant of this round of tax increases, said that the local tire manufacturing industry has been hit by the growth of low-priced imports, and the tax increase is a wise move.
Obviously, it is another controversy caused by the "low-price dumping" of Chinese tires.
China's tire tax increase, who is in favor and who is against?
Who is ANIP? The association was founded in 1960 and consists of 11 companies and 21 factories in Brazil. Specifically, it includes Western brands such as Bridgestone, Continental Continental, Dunlop, and Goodyear.
ANTT, which represents the interests of drivers, said that the main reason for the national truck driver strike in Brazil in 2018 was the increase in diesel prices. SMEs are extremely sensitive to rising operating costs, with a whopping 94% of the 747,000 transport companies currently registered in Brazil owning no more than three trucks. These small businesses struggle to pass on the increase in tire costs to freight rates.
In addition, the representative of the Federation of Autonomous Freight Truckers of the State of São Paulo, Brazil, said that the reason why truck drivers can afford to buy new tires is mainly due to the price reduction caused by competition from imported tires. However, he warned that the increase in transportation costs due to rising tire prices could trigger another nationwide truckers' strike.
The representative of the Association of Tire Distributors and Importers of Brazil (Abidip) also expressed concern that the increase in import taxes would have a significant negative impact on the Brazil economy, especially the chain effects of increased transportation costs.
The measure could lead to a 16% increase in the terminal price of tires for passenger cars and a 25% increase in the price of tires for trucks and buses in Brazil, ultimately having a negative impact of 0.25% on overall inflation, which will be paid by ordinary consumers and road transport logistics companies.
In particular, Abidip said that Brazil tire producers claimed that they had suffered losses due to unfair competition in the market, which obscured the truth. In Brazil's tire multinationals, it is a regular practice to purchase raw materials (SBR) from the Global Sourcing Department. This practice consists of overestimating the price of raw materials in order to be able to transfer profits abroad. According to the association, Goodyear Brazil's subsidiary was effectively forced to buy SBR from Goodyear Chemical in United States, and Goodyear Brazil's profits were locked in as a result.
This explains why Western brands would rather apply for a tax hike from the government than produce low-priced tires to meet consumer demand – and the benefits are a matter of interest. One cannot but be reminded of a similar incident in South Africa.
applied for sanctions against Chinese tires, but he was engaged in monopoly
In January 2022, the South Africa Tyre Manufacturers Association (SATMC) submitted an application to the South Africa International Trade Administration Commission for an anti-dumping investigation against Chinese tires.
SATMC is made up of four tire manufacturers, Bridgestone, Continental, Goodyear and Sumitomo Rubber, and operates five tire manufacturing plants in the region. They blamed dumping practices by Chinese tires, which led to a decline in sales, production, capacity utilization, market share and employment for local tire manufacturers.
However, SATMC's allegations were strongly opposed by the South Africa Tyre Importers Association (TIASA). The TIASA president said the application was "ridiculous and misleading", noting that about 80 per cent of the tyres sold by SATMC members in South Africa were imported. Even if the tariffs come into effect, they won't be producing tires in South Africa because the four companies already enjoy preferential import taxes from their EU factories.
Tariffs on Chinese tires will result in more imports of tires from Europe and Japan, which are of similar quality but at a higher price. After the tax, the cost of taxi tires in South Africa could rise by 41%; The cost of tires for small passenger cars could rise by 38 to 40 percent; The cost of truck and bus tires has risen by an average of 17%.
It is worth mentioning that in February 2022, South Africa Apollo, South Africa Goodyear, South Africa Continental Tires, and South Africa Bridgestone were involved in a price manipulation allegation.
The price manipulation case was allegedly completed with the help of SATMC from 1999 to 2007, with the exception of Apollo Tire, all three members of SATMC.
In 2008, Parsons Transportation Ltd. filed a complaint alleging that local tire manufacturers were manipulating tire prices. The Commission investigated SATMC and the four tire manufacturers and found that they discussed and manipulated the prices of passenger cars, light trucks, buses, off-road, agricultural and construction tires.
In September 2010, Bridgestone applied for and was granted conditional immunity from prosecution under the Commission's leniency policy. In its leniency application, Bridgestone acknowledged that between 1999 and 2007 it communicated by telephone with competitors and held meetings with sales and marketing representatives from various tire manufacturers to coordinate tire price increases and average price increase percentages.
Chinese tires face global unfair treatment
Combined with the two incidents, the similarities are: 1. Chinese tires shake the market position of Western brands; 2. Western brands apply for sanctions against Chinese tires; 3. Taxation is opposed by industry associations; 4. Unfair market competition of Western brands is exposed.
In fact, some countries in the United States and the West have taken protectionist measures against Chinese exporters, such as imposing tariffs and intensifying anti-dumping and countervailing investigations, under the pretext and excuse that "China's overcapacity has hit the world market". In essence, these practices politicize, labelize, instrumentalize, and weaponize the economic concept of overcapacity, and use bullying thinking and behavior to maintain their own development advantages and suppress and contain emerging countries.
However, Western brands have taken advantage of the development opportunity to flood the global capital market, opening factories and associations in various places, and secretly monopolizing the market.
Earlier this year, a lawsuit filed in New York said six tire manufacturers, all operating in the United States, colluded with each other to raise the price of replacement tires: Between 2021 and 2023, United States tire prices rose 21.4 percent, more than 70 percent higher than core inflation. Tire prices remain elevated, despite inflation easing and the effects of the pandemic dissipating.
The European Commission is also launching an antitrust raid on the European tyre industry, with the companies under investigation likely to coordinate with each other to control the price of new replacement tyres for passenger cars, vans, trucks and buses sold in the European Economic Area.
As for the so-called industrial damage caused by Chinese tires by Western brands, according to the Peterson Institute for International Economics, United States' tariffs on tires imported from China have saved about 1,200 jobs in the United States tire manufacturing industry, but it has cost Americans $1.1 billion in the form of price increases.
In the face of such an unfair market environment, China's tire sales slapped everyone in the face - for many years in the world's largest production and exports, while domestic enterprises are accelerating the process of globalization, leading enterprises will turn their attention to Europe, Asia and Africa......
Conclusion: For some countries with relatively backward manufacturing industries, taxation undoubtedly increases the cost of buying tires for consumers; Without taxation, the government cannot attract foreign investment, and it does not have the ability to manufacture tires itself, so it cannot promote economic development. Therefore, behind the sanctions on Chinese tires is a game between capital and the interests of the masses.
If you want to get rich, you must first build roads, tires as an important means of production to promote the transportation economy, for developing countries, cost-effective is the first choice. This also explains why Chinese tires are still loved by consumers around the world, even though they have suffered too much unfair treatment.