Truck and Bus Tires From China Investigation Nos. 701-TA-556 and 731-TA-1311 (Final) Publication 4673 March 2017 U.S. International Trade Commission Washington, DC 20436 U.S. International Trade Commission COMMISSIONERS Rhonda K. Schmidtlein, Chairman David S. Johanson, Vice Chairman Irving A. Williamson Meredith M. Broadbent F. Scott Kieff Catherine DeFilippo Director of Operations Staff assigned Nathanael Comly, Investigator Ray Cantrell, Industry Analyst Michele Breaux, Economist Charles Yost, Accountant Laura Thayn, Statistician Carolyn Holmes, Statistical Assistant David Goldfine, Attorney Elizabeth Haines, Supervisory Investigator Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov Truck and Bus Tires From China Investigation Nos. 701-TA-556 and 731-TA-1311 (Final) Publication 4673 March 2017 CONTENTS Page Determinations .................................................................................................................................. 1 Views of the Commission .................................................................................................................. 3 Dissenting views of Chairman Rhonda K. Schmidtlein and Commissioner Irving A. Williamson 43 Part I: Introduction ................................................................................................................. I-1 Background .................................................................................................................................. I-1 Statutory criteria and organization of the report ....................................................................... I-2 Statutory criteria ..................................................................................................................... I-2 Organization of report ............................................................................................................. I-3 Market summary ......................................................................................................................... I-3 Summary data and data sources ................................................................................................. I-4 Previous and related investigations ............................................................................................ I-5 Nature and extent of subsidies and sales at LTFV ...................................................................... I-5 Subsidies .................................................................................................................................. I-5 Sales at LTFV ............................................................................................................................ I-6 The subject merchandise ............................................................................................................ I-7 Commerce’s scope .................................................................................................................. I-7 Tariff treatment ....................................................................................................................... I-8 The product ................................................................................................................................. I-8 Description and applications ................................................................................................... I-8 Manufacturing processes ...................................................................................................... I-16 Domestic like product issues ..................................................................................................... I-22 Physical characteristics and uses ........................................................................................... I-23 Manufacturing facilities and production employees ............................................................ I-23 Interchangeability .................................................................................................................. I-24 Customer and producer perceptions .................................................................................... I-25 Channels of distribution ........................................................................................................ I-25 Price ....................................................................................................................................... I-25 i CONTENTS Page Part II: Conditions of competition in the U.S. market .............................................................. II-1 U.S. market characteristics......................................................................................................... II-1 U.S. purchasers ........................................................................................................................... II-1 Channels of distribution ............................................................................................................. II-2 Geographic distribution ............................................................................................................. II-2 Supply and demand considerations ........................................................................................... II-3 U.S. supply .............................................................................................................................. II-3 U.S. demand ........................................................................................................................... II-6 Substitutability issues ................................................................................................................. II-9 Lead times .............................................................................................................................. II-9 Knowledge of country sources ............................................................................................. II-10 Factors affecting purchasing decisions................................................................................. II-11 Warranties ............................................................................................................................ II-14 Tiers ...................................................................................................................................... II-16 Branding ............................................................................................................................... II-17 Comparisons of domestic products, subject imports, and nonsubject imports .................. II-18 Comparison of U.S.-produced and imported truck and bus tires ........................................ II-19 Elasticity estimates ................................................................................................................... II-22 U.S. supply elasticity ............................................................................................................. II-22 U.S. demand elasticity .......................................................................................................... II-22 Substitution elasticity ........................................................................................................... II-23 ii CONTENTS Page Part III: U.S. producers’ production, shipments, and employment.......................................... III-1 U.S. producers ........................................................................................................................... III-1 U.S. production, capacity, and capacity utilization ................................................................... III-3 Alternative products .............................................................................................................. III-3 U.S. producers’ U.S. shipments and exports ............................................................................. III-4 Commercial U.S. shipments by type of tire ........................................................................... III-6 U.S. producers’ inventories ....................................................................................................... III-6 U.S. producers’ imports and purchases .................................................................................... III-7 U.S. employment, wages, and productivity .............................................................................. III-7 Part IV: U.S. imports, apparent U.S. consumption, and market shares ................................. IV-1 U.S. importers............................................................................................................................IV-1 U.S. imports ...............................................................................................................................IV-3 U.S. importers' U.S. shipments by tire type ..........................................................................IV-5 Nonsubject sources ...............................................................................................................IV-6 Critical circumstances ................................................................................................................IV-7 China (antidumping duty) ......................................................................................................IV-7 China (countervailing duty) ...................................................................................................IV-8