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20 Jan 2021

Econ Digest

The US starts collecting AD duties on Thai vehicle tires

        On December 30, 2020, the US Department of Commerce announced affirmative preliminary determinations in the antidumping duty (AD) investigations of passenger vehicle and light truck tires from Thailand, Taiwan, South Korea and Vietnam. Its final determinations in these cases are scheduled for mid-2021. In the meantime, importers of vehicle tires from these nations are required to pay AD duties at the rate of 13.25-22.21%. KResearch views that the AD duty rate imposed on Thailand will likely be lower than that preliminarily determined by the US, and that some Thai companies might not even be accused of dumping their passenger tires in the US.        

        However, in the worst-case scenario, i.e., all Thai companies are subject to an AD duty, it is expected that Thailand will lose its competitiveness over the adjustment period during the next 1-2 years. In spite of this, KResearch views that Thai vehicle tires will remain competitive in the US when compared to locally-manufactured and even imported tires, because their prices, in particular for passenger vehicle tires, are relatively lower despite the AD duty. However, the competitiveness of Thai light truck tires in the US market might be threatened if they are subject to the AD duty. Looking ahead, KReseach views that the ability to reduce costs is probably the most important factor in helping tire businesses in Thailand cope with various trade measures.

         Since the export costs of Thai vehicle tires are set to increase for more than half a year during 2021 while waiting for the US AD dumping investigation ruling, the overall exports of Thai vehicle tires will inevitably be affected, because the import prices from Thailand will likely be higher than its rivals. KResearch projects that the combined shipments of Thai passenger vehicle and light truck tires may reach only 18,500,000-19,200,000 million tires during the first half of 2021, which would be lower than Thailand’s export potential (if there is no AD duty). Meantime, the rivals that must be monitored are Indonesia, Vietnam and Canada.

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