In the current changing global trade environment, Chinese tire companies are facing unprecedented challenges and opportunities.
Orient Securities released a research report stating that the bank is optimistic about leading tire companies that have multiple overseas production capacity layouts and can flexibly respond to changes in global tariff policies.
Currently, tire double abnormalities are becoming normal, local exports are facing huge pressure, and exporting production capacity overseas has become a must.
The United States has launched multiple rounds of high-cost anti-dumping and countervailing investigations and periodic reviews on Chinese tires since 2007. The sunset review of U.S. semi-steel tires in 2026 will further strengthen tariff barriers. In the next five years, Chinese manufacturers may be levied anti-dumping duties of 14.35%-87.99% and countervailing duties of 20.73%-100.77%. The combined maximum tax rate reaches 188.76%, directly blocking China’s direct export channels to the United States.
The EU has also stepped up its domestic anti-dumping policy in China and plans to impose anti-dumping duties of up to 51.6%. The number of semi-steel tires imported by the EU from China has dropped sharply.
In addition, trade policies in Brazil, Peru, and Russia have tightened, and regional market barriers have continued to rise.
Under heavy tariff pressure, China’s local tire manufacturers have chosen to export their production capacity to countries such as Southeast Asia. However, as exports from Thailand, Vietnam and other places increase, and anti-dumping investigations against Southeast Asian countries continue to be carried out in the United States, the Eurasian Economic Union and other regions, the advantage of low tax rates may fade.
The US Bill 232 has dealt an indiscriminate blow to tires around the world.
The 232 bill imposes a 25% tariff on globally imported tires, causing the cost of global tire exports to North America to rise. The profit indicators of leading domestic tire companies have been put under pressure, and gross sales profit margins and net profit margins have declined in stages.
The tightening of origin review under the US-Mexico-Canada Agreement has prompted tire companies to implement a localized and asset-heavy layout of the entire industry chain in Mexico.
Global tariff barriers are rising across the board, domestic tire production capacity exports are under pressure, and the diversified layout of global production capacity has become a core prerequisite for tire companies to maintain survival and profitability.
However, under the heavy pressure of tariffs, domestic tires are actively breaking through.
On the one hand, the price/performance ratio of domestically produced tires is still maintained.
Even with the addition of punitive tariffs such as anti-dumping regulations and Section 232, the terminal retail price of Chinese brand tires in the United States is only 40%-50% of that of international first-tier brands, which is lower than that of second-tier brands. Domestic tires have outstanding terminal price advantages and are still cost-effective under high tariffs.
On the other hand, tire manufacturers only share part of the tax rate and their profitability is resilient.
The high tariffs are not fully borne by the companies. The net profit margins of domestic tire companies’ overseas factories generally remain high, and their profits have not been significantly affected so far. The profitability of overseas bases is strong and resilient, and they have the ability to continue to resist risks.
In addition, the multi-site layout of overseas bases has achieved remarkable results.
Emerging countries with production capacity overseas, such as Indonesia, Mexico, Morocco, Serbia, etc., still have obvious advantages in comprehensive tax rates.
Leading domestic tire companies with sufficient overseas production capacity and diversified overseas bases are expected to remain resilient amid intensifying trade conflicts.
Leading companies such as Sailun Tire, Zhongce Rubber, Linglong Tire, and Senqilin have achieved remarkable results in their global layout. They have dispersed risks and transferred orders through multiple bases in Southeast Asia, Europe, America, and Africa, and the profitability of overseas factories remains resilient.
Relevant companies include Sailun Tire, Zhongce Rubber, Senqilin, Linglong Tire, Guizhou Tire, etc.
However, it should be noted that there are also some risks in the industry, such as trade conflicts continuing to intensify, overseas projects falling short of expectations, raw material prices continuing to fluctuate violently, and tire demand declining.
