ITC hears arguments on merits of steel wheel exports from China

Did subsidized steel trailer wheel exports from China, sold in the U.S. at less than fair value, cause material injury to U.S. manufacturers of those wheels?

Or did Chinese wheel suppliers simply outdo domestic wheel makers in quality, supply and on-time delivery?

These were the competing narratives advanced at a July 9 hearing at the International Trade Commission (ITC), which is in the final stages of an investigation of Chinese imports of steel wheels with rim diameters of 12 to 16.5 inches.Elkhart, Ind.-based Dexstar Wheel Co., a division of Americana Development Inc./Kenda Rubber Industrial Co. Ltd., petitioned the ITC in August 2018 for relief against Chinese steel trailer wheel imports under Sections 701 and 731 of the Trade Act.On July 2, the U.S. Department of Commerce levied countervailing duty rates of 388.71% against Zhejiang Jingu Co. Ltd., 386.45% against Xingmin Intelligent Transportation Systems Group, and 387.88% against all other importers of Chinese steel trailer wheels.

Commerce also issued antidumping duty rates of 38.27% against Changzhou Chungang Machinery Co. Ltd., with a cash deposit rate of 16.57%, and 44.57% against all other importers, with a cash deposit rate of 22.65%.

At the ITC hearing, however, representatives of the Chinese importers characterized the steep tariffs as a serious misreading of the steel trailer wheel market.

"You need to look beyond the raw data toward the critical aspects of competition in the market," said Max F. Schutzman, an attorney for the Washington law firm of Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt L.L.C., who represented the importers.

According to figures from Commerce, Chinese steel trailer wheel imports to the U.S. grew to 4 million units, worth $89.8 million, in 2017 from 2.2 million units, worth $60.4 million, in 2015.

Mr. Schutzman, however, argued that Dexstar sells its products mainly to sister companies in the U.S. owned by Kenda, essentially ignoring those companies' domestic competitors.

"U.S. trailer manufacturers say they cannot purchase wheels from U.S. producers," Mr. Schutzman said. He added that those manufacturers specifically called out Dexstar as being unresponsive to their needs.

For its part, Dexstar argued that it was the importers that were mischaracterizing the steel wheel market.Despite the importers' assertions, Dexstar doesn't only sell to related companies, according to P. Jeffrey Pizzola, chief financial and operating officer of Americana Development.

"Major unrelated assemblers have purchased from Dexstar when Dexstar has been able to be competitive with Chinese prices," Mr. Pizzola said.

Accompanying Mr. Pizzola and his colleagues were representatives of U.S. companies unrelated to Dexstar who testified that they can get steel wheels from Dexstar of high quality and in the quantity they need.

"In my view, Dexstar's U.S. wheels will stack up against anything, anywhere," said Anthony Mountain, president of Homesteader Inc., a Tennessee-based producer of cargo, hydraulic dump and horse trailers.

The ITC is scheduled to make its final determination on material injury in the steel trailer wheel case on or about Aug. 15.