Chinese tyre manufacturers, especially those with overseas facilities close to key Western markets, could emerge stronger from the global tariff war as consumers switch to cheaper alternatives, according to analysts. The US will impose a uniform 25 per cent duty on all imports of automobile parts on May 3, which could lead American consumers to consider cheaper Chinese brands for their replacement tyres. “Due to lower prices, Chinese brands will have an edge over European, Japanese and South Korean rivals for the same effectiveness,” Zhang Tingzhou and Song Tingting, analysts at Huatai Securities, said in a report. Higher-priced global brands like France’s Michelin and Japan’s Bridgestone, which have a higher sales exposure to the US market, are thus more vulnerable to margin erosion, they noted. The US imported tyres from Thailand at US$38 each on average last year, compared with US$79 from Japan and US$177 from France, the analysts said, citing data from the US International Trade Commission and business-to-business e-commerce platform SimpleTire. Export-oriented Chinese producers, already subject to US anti-dumping and countervailing duties on heavy-duty tyres totalling 30 to 86 per cent since 2019, have invested in factories in Southeast Asia over the past decade to globalise their production and mitigate increasingly hostile trade policies. Tyre producers with global supply chains and production sites close to the most lucrative markets of Europe and North America would stand a better chance of protecting their profitability and handling the latest curve ball in the form of higher tariffs from the Trump administration, analysts at Donghai Securities wrote in a report last week. Shenzhen-listed Qingdao Sentury Tire, which owns production facilities in Thailand and Morocco, “has accumulated many years of experience coping with import duties and other protectionist measures”, according to its stock exchange filing. The firm commissioned a plant in Thailand in 2016 and expanded its annual production capacity to 18 million units in 2023. Its plant in Morocco, which can churn out 12 million units annually, was expected to have an edge over factories in Asia when it comes to selling to the US market, the company said on April 8. Together, the two plants make up two-thirds of Qingdao Sentury’s total capacity for now. The company is keen to add a factory in Spain that can make 14 million units annually, part of its 10-year programme to own five facilities overseas to complement three in mainland China, according to a company filing. A larger local rival Sailun Group, based in Qingdao and listed in Shanghai, said it would build more tyre production facilities in Indonesia and Mexico to add to its plants in mainland China, Vietnam and Cambodia. The US had earlier imposed a 25 per cent tariff on all imported vehicles from April 3 on perceived threat to national security. The same level of tariff will hit auto parts, including tyres, no later than May 3. However, auto parts that qualify for preferential treatment under the US-Mexico-Canada free trade agreement would be exempted. The Trump administration announced a baseline tariff of 10 per cent and additional so-called reciprocal tariffs on dozens of trade partners. Those additional tariffs were later suspended for 90 days, pending bilateral negotiations. Automobiles and auto parts, however, were not affected by the so-called reciprocal tariffs. Morocco, which signed a free-trade agreement with the US in 2006, was assigned the lowest 10 per cent reciprocal tariff. The country might be able to lower the 25 per cent tariff on auto parts in negotiations, said Zhang Weiboas, an analyst at China Fortune Securities. Its relative proximity to Europe and the US compared with Southeast Asia also means it would have an advantage over Southeast Asia when exporting to Western markets, Zhang said in a note on Friday. Southeast Asian nations and Mexico were among the top exporters of vehicle tyres to the US, according to data published by the US International Trade Commission. Thailand shipped US$3.62 billion worth of them last year, or 19.3 per cent of the total. Mexico (11.5 per cent), Vietnam (7.3 per cent), Indonesia (4.6 per cent) and China (4 per cent) made up the top sellers. Imports accounted for 64 per cent of all vehicle tyres sold in the US last year, according to Huatai Securities. Due to the high reliance, the brokerage said US imports were unlikely to weaken substantially in the short term, and the extra duties would be borne by manufacturers, distributors and consumers, it said.