Why higher import taxes on Chinese tyres in South Africa could be a good thing

Higher import taxes on Chinese tyres in South Africa could save the local tyre manufacturing industry and retain jobs, according to the South African Tyre Manufacturers Conference (SATMC).
The SATMC recently applied to the International Trade Administration Commission (ITAC) to investigate the practice of tyres being imported from China at “unfairly low prices” and causing damage to the local manufacturing industry.
The SATMC represents the four tyre companies: Bridgestone, Continental, Goodyear, and Sumitomo Rubber South Africa.
In response, the Tyre Importers Association of South Africa (TIASA) said this investigation could lead to additional import duties of between 8-69% to be levied on Chinese tyres, which in turn could push up the average tyre price in the country by as much as 41%.
TopAuto spoke to Nduduzo Chala, managing executive of the SATMC, to find out more about what this investigation means for domestic tyre prices.
Investigation into Chinese tyre imports
Chala said the SATMC’s application to the ITAC is not a call to impose specific anti-dumping levies on tyres imported from China.
Rather, he said, the SATMC has submitted evidence to the ITAC and requested an investigation into tyres being “imported from China at unfairly low prices that are causing material injury to the local industry.”
“Material injury refers to the hinderance of the growth of the local manufacturing industry which has a direct impact on the ability to sustain and create jobs in South Africa,” said Chala.
If this is found to be true and the ruling is in the SATMC’s favour, only the ITAC can determine the extent of levies to be imposed on Chinese tyres coming into South Africa based on the findings of its investigations.
Chala previously said similar actions have been taken in countries such as India, Nigeria, the UK, and the US to protect the field.
According to Africa Business Pages, Nigeria raised import taxes on all tyres from 10% to 40% in 2012 to halt the shrinking of the country’s tyre industry.
The Nigerian government initially decreased tyre import duties in 2007 which saw many manufacturers flee to neighbouring areas to “avoid the competition they faced from tyre imports from places like Dubai, India, the Far East, and China,” states the report.
By 2012 before the levies were reinstated, the only remaining tyre company in Nigeria was Dunlop, which witnessed a decline in turnover from $3.4 billion to $226 million over the period.
Average South African tyre prices
If additional levies are imposed on Chinese tyres in South Africa, Chala said it is too premature to predict the amount by which the average tyre prices may rise.
“While we appreciate that the consumer is concerned about price point, the issue of pricing has clouded the real issue at hand, which has far dire consequences on the country as a whole,” he said.
“The main objective of an anti-dumping application is not to raise prices as it has been made to seem, but to ensure there is fair trade and that local manufacturers remain competitive.”
Chala said the manufacturers represented by the SATMC are “committed” to pricing their products based on the expertise, research, innovation, value-added guarantees, and relevant labour laws that went into developing them.
“The SATMC members have no intention to hit the wallets of customers adversely,” said Chala.
“[They] are concerned about the knock-on effects of these destructive dumping practices on job creation and economic growth within South Africa.”
Over the past three years the domestic tyre industry has contributed over R15.9 billion to the South African economy and directly employed 6,000 individuals while offering indirect employment opportunities to a further 19,000, he said.
Investigation outcome
The ITAC investigation was initiated on 31 January 2022 and is now in its preliminary phase.
Responses are currently being received and assessed in line with the relevant regulatory and legislative criteria, and the next procedural step is a preliminary determination by the ITAC which is expected to be issued in August.
The investigation is required to be finalised within 18 months from the date of initiation, according to the SATMC, with a final determination expected for early 2023.