Chinese tire taxes can make trips to South Africa expensive – but will save jobs, local producers say

  • Tires from China will now be subject to an additional 38.33% duty as part of a preliminary dumping determination by the International Trade Administration Commission.
  • Higher tariffs on Chinese tires will make travel and transport in South Africa more expensive, importers say.
  • But allowing these cheap tires to flow into South Africa will create more unemployment, local manufacturers say.
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A battle rages over the influx of Chinese tires into South Africa, with importers arguing that higher tariffs will make travel more expensive and local manufacturers drawing attention to widespread job losses.

Tires imported from China are now subject to an additional duty of 38.33%, according to a recent official journal signed by the Head of Legislative Policy, Tax, Customs and Excise of the South African Revenue Service (SARS). .

This new provisional duty on tires imported from China is the result of a preliminary dumping determination issued by the International Trade Administration Commission (ITAC). The Commission has been approached to investigate “unfairly traded” tires from China, which allegedly undermined and crippled local manufacturers.

These tires are being imported at “unfairly low prices”, says the South African Tire Manufacturers Conference (SATMC) in its request for relief from ITAC, and are causing “significant harm to local industry”.

Local tire makers want anti-dumping duties applied to Chinese imports, which he hopes will create better price competitiveness and give the South African industry a chance to revive. The recently announced interim payments, welcomed by SATMC, will be in place until March 2023 while ITAC continues its investigation.

But there is fierce opposition to SATMC’s push for more expensive Chinese tyres, including from the Tire Importers Association of South Africa (TIASA), which has already called on the government to rescind the latest taxes. During Itac’s period of investigation – August 2020 to July 2021 – R5.7 billion worth of tires were imported into South Africa, almost half of which came from China.

Tire importers say additional duties, which they say could range between 8% and 69%, will ultimately increase the cost of travel and transport in South Africa.

“These increases will be extremely difficult for financially constrained consumers to bear given the current inflationary climate,” said Charl de Villiers, president of TIASA, in response to the latest obligations.

“The unfortunate consequence is that people will delay replacing their tires or opt for illegally regrooved tyres, both of which are exceptionally dangerous outcomes, especially as we head into the holiday season.”

Key to TIASA’s argument against higher import duties is their assertion that SATMC members – Continental, Bridgestone, Goodyear and Sumitomo – import the “vast majority of the more than 3,000 different models of tires they sell”.

“They have to because it’s not cost effective to set up production lines for so many models in one factory,” De Villiers said.

Anti-dumping duties imposed on tires from China will, according to De Villiers, have a ripple effect on the price of goods and more particularly food, since tires are the third most important cost of entry into transport. , after salaries and fuel.

The more expensive Chinese tires also have the potential to impact bus and taxi commuters, De Villiers said. Taxi operators, for example, will now pay 23% more for tires, at least part of which will be passed on to commuters.

Local manufacturers say TIASA is determined to move the narrative towards cost increases, which it knows is a particularly hot topic among cash-strapped, far-fetched South Africans. employment issue, which SATMC says is the real heart of its anti-dumping duty claim.

“Consumers and ourselves must not be misled by the importers’ short-sighted narrative that travel will be expensive and start focusing on the country maintaining and creating more jobs for its citizens,” Nduduzo Chala, managing director of SATMC, told Business Insider SA. .

“An environment conducive to improved and increased industrialization is one that will guarantee people jobs and a thriving economy. No substantial investment is made or ever made by importers. These are local manufacturers who contribute to the growth of the country, and that must be protected.”

Chala added that the local tire manufacturing sector currently employs 6,500 direct and 19,000 indirect employees and that “these are at risk if unfair trade is not addressed, and local manufacturers continue to be uncompetitive.” “.

TIASA says its members “are all South African wholesalers, many of whom have been in business for two or three generations, directly employ 3,000 people and support at least 55% of the 19,000 indirect jobs claimed by SATMC.”

“The fact is that every job maintained in our country is valuable,” De Villiers said.

“The additional duties will drive many of these businesses out of business, destroy jobs, [and] add an excruciating financial burden to every motorist in the country, every bus company, every taxi owner and every commuter.”

Interestingly, both parties – SATMC and TIASA – drew parallels between import duties on Chinese tires and South Africa’s controversial anti-dumping duties on imported chicken. Anti-dumping duties imposed on imported poultry, in an attempt to save the local industry, were recently suspended to help consumers amid growing financial pressures.

“Earlier this year, the government absorbed some of the fuel tax increases, passing that saving on to consumers and businesses,” De Villiers said.

“Similarly, in August, the Minister for Trade, Industry and Competition decided, in the public interest, to suspend the imposition of anti-dumping duties on imported chicken. It shows that the government is ready to make tough decisions that are in the best interests of consumers. interest.”

Chala cited cheap chicken imports into South Africa and the impact on local jobs as an example of what happens when local producers are underpriced.

“In South Africa we have seen large organizations shut down because they did not understand the future consequences of unfair trade, and the poultry industry is an example of this, where there have been losses massive jobs. We can’t have the same in the tire business,” says Chala.