New import hikes on Chinese tyres to hit SA consumers hard

Consumers could be hit by increases in the costs of transport and goods after new import duty hikes were imposed on Chinese tyres.

SA’s trade regulation body, the International Trade Administration Commission (Itac), this week announced a 38.33% ad valorem duty on what it terms unfairly traded (dumped) passenger, truck and bus tyres imported from China. The provisional payments will be in place for six months from September 9 2022 until March 8 2023.

The new duties come on top of existing import duties of between 25% and 30%. 

The SA Tyre Manufacturers Conference (SATMC), which applied to Itac for relief against dumped imports from China in late 2021, welcomed the move.

“These provisional payments will address the issue of unfairly traded tyres from China that over many years have caused the Southern African Customs Union (Sacu) tyre industry to suffer material injury that placed the tyre industry’s future, investment opportunities as well as direct and indirect job creation at risk,” said the SATMC, a representative body of SA’s four tyre manufacturing companies: Continental, Bridgestone, Goodyear and Sumitomo.

“Fairly traded imports at prevailing prices from countries other than China, such as Korea and Japan, will continue unaffected into Sacu,” it said.

However, the Road Freight Association (RFA) said the increased duties would affect consumers not only with higher-priced passenger car tyres but they would also pay more for public transport and goods. Gavin Kelly, CEO of the RFA, said more than 80% of SA’s goods are transported by road and warned that the increase in the price of tyres will drive the price of transportation up by at least 8%.

“This means that, despite the dire economic situation in the country, consumers will pay more for goods, including the basic basket of everyday food, transport and medicines. This will drive inflation – if not higher, it will definitely hold off any decreases from occurRing a lot sooner than we had hoped,” said Kelly.

“Tyre prices incurred the normal annual increase in July 2022 – which was 5.9%. By adding the anti-dumping levy, tyre prices will now increase by a whopping 44.7% in a single year. This is untenable for any transport operation – whether moving freight or passengers – and will see increases inevitably being passed on to consumers,” he said.

The Tyre Importers Association of SA (Tiasa), said introducing a pricing bombshell like this into the current inflationary environment is going to be devastating for South Africans.

“This decision by government is unfathomable. Duties are simply another form of tax on the consumer and on businesses, and it is clear that Itac and the department of trade, industry and competition have not properly considered the impact this will have on the cost of goods, transport and on inflation itself,” says Charl de Villiers, chair of Tiasa.

The application had also drawn opposition from the taxi industry, which said it would be forced to pass on the increased costs to consumers as tyres are the third-biggest cost after wages and fuel. 

Theo Malele, spokesperson for the National Taxi Alliance, said the government should look at every way possible to arrest the surging cost of transport.  

The SATMC says the investigation that was initiated on January 31 2022 is still ongoing and that only the preliminary phase of the investigation has been concluded and resulted in the provisional payments.

Interested parties have 14 days from the date of publication of the preliminary report to comment in writing to Itac.  The Itac investigation will continue with its final phase  before issuing a final determination that must be published by July 31 2023.