Equipment

DOC Miscalculation Raises Tariffs on Truck Tires From China

October 12, 2016

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The U.S. Department of Commerce has admitted to a miscalculation in its preliminary anti-dumping tariff rate for truck and bus tires imported from China.

As a result, the rates of every manufacturer and importer are increasing to 30.36% - nearly 10 points higher than the initial calculation, according to a report on our sister website Modern Tire Dealer.

The change stems from two fine details that were used to establish the rate for Prinx Chengshan (Shandong) Tire Co. Ltd. One is related to using a per-kilogram basis instead of a per-piece basis in the calculation; another refers to not using a weight average when reconstructing control numbers.

The result is what the DOC calls a significant ministerial error, which it defines as a mathematical or clerical error that “would result in a change of at least five absolute percentage points, but not less than 25% of the weighted average dumping margin.”

As it relates to this anti-dumping tariff, the recalculated rate for Prinx Chengshan is 30.36%, up from 20.87%.

In every tariff investigation the DOC selects manufacturers to serve as mandatory respondents. Those companies then provide data and answer questions, and those figures and answers serve as the basis and gauge for the whole industry. Other manufacturers also may volunteer to provide their data throughout the investigation as well. Usually there’s at least a slight reward in doing so because companies that don’t comply can be subject to the highest tariffs.

That was the case in August when the anti-dumping rates were first announced. DOC set a rate for Prinx Chengshan, and used that same rate for the “non-selected separate rate respondents.” A slightly higher tariff, of 22.57%, was levied against all other manufacturers in China.

As it turns out, the rate for Prinx Chengshan is now higher than the rate originally imposed on all the other manufacturers, so tDOC is applying the 30.36% tariff to all truck and bus tires from China.

Keep in mind, the anti-dumping rate is only half of the tariff equation.

There are two ongoing investigations related to truck and bus tires from China, and the two rates are combined and levied on all shipments. These anti-dumping tariffs are added to the countervailing tariffs, which are imposed to account for subsidies the companies are receiving from the Chinese government. The countervailing tariffs vary slightly by producer: 17.06% for Double Coin Holdings Ltd.; 23.38% for Guizhou Tyre Co Ltd.; and 20.22% for all other importers.

But the net effect is that most truck and bus tires from China will be assessed a 50.58% tariff. (Double Coin’s combined rate is 47.42% and Guizhou Tyre’s combined rate is 53.74%.)

These figures represent the preliminary phase of both tariff investigations. DOC continues to investigate and is scheduled to make its final ruling Nov. 9, and the International Trade Commission is scheduled to hold a final hearing on the investigation on Jan. 24, 2017.

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