The U.S. Department of Commerce has imposed steep anti-dumping duties on Chinese passenger and light truck tires. The U.S. International Trade Commission (USICT) invoked a China-specific safeguard to apply punitive duties ranging from 25 to 35 percent on imports of Chinese passenger and light truck tires between 2009 and 2012 to limit imports of low-end products from Chinese tire producers. Again in 2015, the ITC voted in favor of issuing anti-dumping duties averaging 31 percent on Chinese tire imports, deciding to table the case for sunset review in 2020. The reasoning behind the decision was that the U.S. government believed Chinese tire industry had been benefitted from Beijing’s unfair subsidies above the level the U.S. government allowed, specifically: subsidies of less than 1 percent for imports from developed countries and of less than 2 percent for imports from developing countries. In this regard, the U.S. government seems to be concerned that an influx of cheap Chinese tires would hurt U.S. tire producers by cutting into their sales and market share and lowering domestic prices.If we focus on trade performance alone, the U.S. government’s decision to raise duties on Chinese tire imports has benefitted South Korean tire producers. Chinese tire manufacturers used to hold a considerable share of the U.S. market owing to their price-competitiveness, but with additional duties averaging 31 percent imposed on Chinese tire imports in the U.S., the prices for Chinese tires went up. This led to an increase in import volumes for tires from South Korea and Thailand, both of which compete with Chinese tires in the U.S market, and firms from both nations gained market share. However, it is hard to say that South Korean and Thai tire manufactures are competing in the same market, when we consider unit prices of their tire exports to the U.S. The fact is that unit prices for tire exports to the U.S. from China, Thailand and South Korea are different: Chinese and Thai tires are cheaper than Korean tires.The Chinese tire industry has pursued various mergers and acquisitions in and outside China in an attempt to enhance quality and technological competitiveness. What is worrisome for Korea is that should China acquire technological advantages by 2020, the USITC might eliminate anti-dumping and countervailing duties on Chinese tires when it conducts its scheduled sunset review, resulting in fiercer competition between South Korean and Chinese tire producers in the U.S. market. Furthermore, Chinese tires are projected to secure even more market share in the U.S., and not just in the low-end of the market but also at the high end, becoming a major competitor to South Korean tire producers. This might eventually lead to lower demand for Korean tires in the U.S. In fact, the USITC decided in 2017 to remove punitive duties on imported Chinese truck and bus tires, which suggests that concerns over possible risks to South Korean tiremakers might one day materialize. In light of the circumstances, this study quantitatively analyzes the impact of anti-dumping duties imposed by the U.S. government on imported Chinese tires. In doing so, this study aims to statistically verify whether South Korean tire producers have benefited from U.S. anti-dumping measures. Adding to that, it measures substitute relationships between tires from China, Thailand and South Korea, major competitors in the U.S tire market, to project the impact of possible changes in duties on Chinese tires on the export volume of South Korean tires to the United States
