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Frugal Shopper: Experts Say Tire-Tariff Price Spike Looms Ahead

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Flat tire, by Flickr user Lissalou66

Flat tire, by Flickr user Lissalou66

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TCC's Frugal Shopper ALERT: If you drive a small, aging econocaror even a mid-size sedanand have been thinking about new tires, get them now, because several weeks from now you might be paying $20 or $30 more for a set.

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Last month the federal government imposed a controversial new 35-percent tire tariff on passenger car and light-truck tires imported from China. The tire industryincluding a number of retailershad been opposing the tariff and predicted that prices will rise as a result-at an inopportune time, with affordable tires most affected at a time when owners can't afford the extra cost.

The tariff was heavily influenced by the United Steelworkers Union, which represents a large portion of U.S. tire workers. The Steelworkers appealed to the Obama administration that U.S. tire-related jobs are in danger and that the surge in imports from China over the past several years required action. From 2004 through the end of 2008, tire imports from China increased by nearly 300 percent as U.S. production fell by more than 25 percent and 4,400 jobs were lost. Another 2,400 were expected in 2009.

Opponents of the tariff, along with representatives of the tire industry and some industry analysts, have said that companies will simply move tire production to another inexpensive manufacturing location, like Brazil or India.

In the meantime, China is considering temporarily rolling back a VAT (value-added tax) applying to tires, which might help reduce the market impact.

Yet more than a month later, U.S. tire retailers still haven't significantly changed their prices. At least at this time it looks like the aftereffects of the tire tariff won't hit the market as a whole.

"The major manufacturers have very little production in China...So we don't see an impact there, as a direct result," said Matt Edmonds, vice president of Tire Rack, a company that sells specialty and performance tires. Edmonds says that in the bulk of the tire market, prices won't rise appreciably.

"There could potentially be some price increases across the board," said Edmonds, due to shorter supply that might affect the whole market, but it would be temporary as the affected companies would look to procure tires from other factories elsewhere in the world. "Right now we're not seeing any."

A representative of a major discount tire retailer, who would only speak off the record, said that her company hasn't seen any impact on tire prices yet, though it's still a little early to say there won't be any ripple in cost, and it depends on the choices that tire companies make in coming months about supply.

But it still might be too early to say whether this will affect a significant portion of the market, and owners of certain types of vehicles could expect a price bump. Several manufacturers have announced price hikes, but they haven't yet affected the retail level. Bridgestone Americas announced last week that prices will increase by up to 15 percent on some passenger and light-truck tires under the Primewell, Firestone, and Dayton brand names, and Pirelli announced last week that it will raise prices 10 percent on its P4 and P5 P4 Four Seasons and Cinturato P5 passenger tire lines. Cooper and Toyo have also said that prices will rise between 10 and 15 percent on some of their most affordable tires.

The new Ford configuration tool lets you style it and then show it off, complete with smoky burnout

The new Ford configuration tool lets you style it and then show it off, complete with smoky burnout

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These are all budget-priced aftermarket tires; the tariff is unlikely to affect the market for performance or luxury vehicle tires, or even prices on new vehicles, in the long run. Rest assured, the cost of a burnout in a Chevy Camaro SS or Ford Mustang Shelby GT500 won't rise. However, if you drive a small, inexpensive car like a Chevrolet Aveo, or even a compact like a Toyota Corolla, you're likely going to take the largest hit from the tariff. And it could make a difference for those meticulously watching their auto budget, though we might see drivers trying to stretch their balding treads a little longer.


 
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