U.S.-China Tire War to Benefit Local Makers
By Kim Hyun-cheol
Staff Reporter
The ongoing trade friction between the United States and China over tariffs on tires could help Korean makers secure easier access to the U.S. market, a state-run trade agency said Monday.
As tension heightens between the two giants, Korea is likely to have better chances to sell more items there, including tires, in its competition with Chinese rivals, the Korea Trade-Investment Promotion Agency (KOTRA) said.
In September, Washington decided to levy an additional 25 to 35 percent tariff on $1.8 billion worth of tire products from China over the next three years.
In response, the Chinese government launched anti-dumping and anti-subsidy investigations into the U.S. poultry and automobiles industries, crucial American exports. This year, China exported $1.3 billion worth of tires to the United States while the United States exported $800 million worth of cars and $376 million in poultry products to China.
U.S. President Barack Obama approved the action to slow the rapid growth of U.S. imports of Chinese-made tires, which has led to the loss of thousands of American jobs.
An infuriated Beijing criticized the move as a violation of free trade. The feud between the two countries expanded to other products including steel pipes, auto parts, movies and music.
Korean tires, consequently, will have better price competiveness, and a general markup may even be possible, KOTRA forecast.
South Korean companies that make products in Chinese plants won't be dealt severe damage from the disputes, as they are opting to switch the destinations of their China-made tires to places other than the United States.
Benefits for South Korea, however, may not come right away as Chinese exporters reportedly secured stockpiles of available products in the U.S. market before the protective action was put in motion, KOTRA said.
Other products that could reap benefits include laminating film and steel pipes as the United States has decided to levy tariffs countervailing duties on Chinese plastic film and oil pipes on charges of dumping. Ongoing textile probes could also create a positive effect for Seoul.
Korean makers, which struggled in the American market against discount competition, will be the biggest beneficiary if Chinese rivals are slapped with penalties, KOTRA said.
However, it added that the trade war will have no particular effect on Korean companies in China.
Kwon Oh-suk, a KOTRA director, said Korean companies shouldn't be too dependent on the currently favorable circumstances. ``This should be regarded as a chance for Korean makers to beef up competitiveness in the U.S. market. In the long term, however, they can't live on such side effects for too long,'' he said.