China regains U.S.'s No. 1 trading partner status

The U.S. tire sector trade deficit shrank slightly last year as the value of exports shot up nearly 62 percent while the value of imports rose close to 10 percent in 2017 to a record $13.8 billion.

As a result, the U.S. trade deficit in tires slipped to $9.66 billion last year — down from $10 billion in 2016 — reflecting $4.1 billion in exports and $13.8 billion in imports.

It's the first time the tire sector trade deficit has shrunk in recent memory.

Canada, Mexico and Australia were the top three destinations for tires exported from the U.S., accounting for nearly 72 percent of U.S. exports by value.

On the import side of the ledger, China regained the title as the U.S.'s largest trading partner in tires, as the value of its overall exports to the U.S. jumped 28.2 percent to $1.95 billion a year after the value of its shipments to the U.S. slid 1.9 percent.This story appears in the Feb. 26 print edition of Tire Business. China's gain over 2016 came from higher shipments of OTR, farm and other non-highway tires, according to the Commerce Department data.

China's exports of passenger, light truck and medium truck/bus tires to the U.S., by contrast, all declined last year from 2016, reflecting the continued imposition of elevated import duties on consumer tires and the shift by several leading Chinese tire makers of truck tire production to plants in Thailand, Indonesia or Vietnam.Tire Business graphic by Michael McCradyA year after landing at the top of the list of U.S. trading partners, Canada slid to third on the 2017 list, eclipsed by Thailand as well as China. Imports from Thailand last year were valued at $1.86 billion, 35.8 percent higher than in 2016.

The value of Canada's imports slid 2.5 percent to $1.54 billion.

South Korea and Japan rounded out the top five at $1.34 billion and $1.09 billion, respectively. Both countries' imports were down in value from 2016, by 6.3 and 7.6 percent, respectively.

Mexico, Indonesia and Taiwan were the next largest sources of imported tires, valued at $839.6 million, $749.8 million and $491.4 million, respectively. All were up measurably vs. 2016.

Of its major trading partners, the U.S. held a surplus with just one country, Mexico, which took in $1.2 billion worth of tires from the U.S. last year and exported $839.6 million to the U.S., resulting in a trade surplus of $360.2 million.

Canada was the No. 1 export destination for U.S.-made tires at $1.49 billion, but Canada's $1.54 billion in shipments to the U.S., resulted in near equilibrium. The next largest export destination was Australia, which took in $257.7 million worth of products from the U.S.

On the import side, Thailand solidified its status as the No. 1 source of imported passenger tires, shipping 30.1 million units to the U.S. last year, an increase of 26.6 percent.

South Korea ranked second for the second straight year despite a 12.9-percent drop in shipments, to nearly 16 million units.

China, the perennial No. 1 until two years ago, slid to fifth last year as its passenger tire exports to the U.S. plunged nearly 35 percent to 10.6 million units. Indonesia and Mexico, with 15.1 million and 11.8 million units, respectively, claimed the third and fourth spots ahead of China.

Overall imports of passenger tires edged up just 0.6 percent last year over 2016 to 147.5 million units.

The average declared customs value of an imported passenger tire last year edged up 0.8 percent to $49.52, with prices for tires from the major trading partners ranging from $27.90 (China) to $65.20 (Canada).

Thailand's status as the leading source of tires for the U.S. is expected to keep growing, based on the number of tire plants that have opened there recently or are under construction or being expanded.

Germany's Continental A.G. and China's Shandong Yinbao Tyre Group Co. Ltd., for example, have new plants under construction, and Shandong Linglong Tire Co. Ltd., Otani Tire Co. Ltd. and Vee Rubber Co. Ltd. have capacity expansions under way.

The average declared value of a car tire from Thailand last year was $36.44, down 3 percent from 2016 and more than 26 percent below the average of $49.52 for all imports.

The big climber of the year was Vietnam, which has attracted tire plant investment in recent years from Chinese, Japanese and Taiwanese tire makers. Exports from that Southeast Asian country to the U.S. grew 50.7 percent to 6.46 million units.

Canada remained the No. 1 source of light truck tire imports last year despite a 16.7-percent drop in cross-border shipments. Thailand solidified its No. 2 position on the light truck list, shipping a third more LT tires — 5 million — to the U.S. than in 2016.

South Korea's LT tire exports to the U.S. dropped 18.2 percent to 2.76 million units, just ahead of Vietnam's 2.61 million.

Overall, light truck tire imports slipped 4.3 percent last year to 26.7 million units as eight of the top 10 trading partners in this category reduced their exports to the U.S.

While unit shipments were down, the average declared value rose 0.5 percent to $69.23, with prices among the larger exporters ranging from $53.15 (Vietnam) to $94.90 (Japan).

China continued last year as the No. 1 source of imported truck/bus tires, despite shipments falling 15 percent, to 6.49 million units. It was the second straight double-digit decline in truck/bus tire imports from China.

Overall truck/bus tire imports were up 5.1 percent to 14.6 million units, with double-digit increases by seven of the top 10 countries — Thailand, Japan, South Korea, Germany, Spain, Vietnam and Indonesia — more than offsetting the drop in shipments from China.

Thailand, Canada, Japan and South Korea are second through fifth on the list, with Thailand's exports to the U.S. eclipsing the 2 million mark for the first time.

Thailand's truck tires exports to the U.S. are set to grow even more in the coming years as more capacity comes on stream there.

Among the new plants there is Shanghai Huayi (Group)'s joint venture in Rayong Province, a plant with a designated annual capacity of 1.5 million truck and bus tires and 50,000 industrial tires. Shanghai Huayi is the parent of Double Coin Holdings.

Also contributing to Thailand's gain is international tire distributor Zafco Trading L.L.C., which is sourcing its Amstrong-brand truck tire range from Otani Radial Tire Co. Ltd. in Thailand, in which Zafco holds an undisclosed ownership stake.

Worth noting: Vietnam's truck/bus tire exports to the U.S. shot up from just a few thousand in 2016 to nearly 300,000 last year, and shipments from Indonesia went from a few hundred units to 183,280 units last year.

Cooper Tire & Rubber Co. recently disclosed it had struck an off-take production deal with Sailun Vietnam Co. Ltd. for the production of radial truck and bus tires, giving it a third source for truck tires it sells under the Roadmaster, Dean and Starfire brands.

Sailun Vietnam, a subsidiary of China's Sailun Group, has been producing tires at its plant in Tay Ninh Province, Vietnam, since early 2014 and has committed $200 million more for a second plant at that site for radial truck and OTR tires.

The average declared value of an imported medium truck/bus tire last year was $152.98, up 7.8 percent from 2015. Prices ranged from $109.59 (China) to $263.95 (Canada) among the largest trading partner countries.