US Tire Industry Has a Lot at Stake If Steel Regulation Changes

The importance of American manufacturing is never far from the headlines these days. Analysts, politicians and TV personalities are often reporting on the health of domestic manufacturing, and when they do so, they tend to point to the same sectors as indicators of success such as tech, cars and energy.

Yet, many don’t realize that while those products may fluctuate due to purchasing cycles and external forces, there are other booming manufacturers located here in the United States that boost jobs and local economies throughout the country and deserve more of our attention and investment.

It’s more evident now than ever before that tire production is one of those, often unsung, shining lights of the U.S. economy. With both domestic and international manufacturers investing in America, the U.S. tire manufacturing industry is a $148.4 billion industry that is responsible for more than 737,000 U.S. jobs — and that is only the status quo.

That’s why it might be surprising to learn that the U.S. Department of Commerce is considering an action that could pose a risk to this important and growing industry.

A law known as the Trade Expansion Act of 1962 authorizes the secretary of commerce to conduct investigations to determine the effects that imports of any article may have on national security. At the direction of the president, the Commerce Department is currently looking into the national security implications of steel imports.

Based on the Commerce Department findings, which are expected soon, the Trump administration is expected to decide whether to impose restrictions or tariffs on steel imports, and much of the discussion has focused on the potential resulting impacts on global trade. While this is important, it is also critical that we focus on the impact such decisions could have on U.S. industries like tire manufacturing.

In the United States, tire manufacturers provide over 737,000 jobs, operate 55 tire-related manufacturing facilities in 19 states and generate over $148.4 billion in sales as an industry, demonstrating the important and critical role tire manufacturing plays in the nation’s shipping and commerce needs.

And the U.S. is attracting more tire makers: by 2019, seven offshore companies will have opened their first U.S. manufacturing facilities bringing additional much-needed jobs.

Virtually all steel used in U.S. tire manufacturing must be imported, as domestic steel suppliers cannot meet volume and quality needs for this critical tire safety component. Thus any trade constraint could potentially have a cascading, negative impact on U.S. commerce nationwide, as the transportation industry depends on a reliable supply of tires to ship goods. Additionally, the U.S. military depends on the tire manufacturing industry to supply tires used to protect our national security.

That’s why the U.S. Tire Manufacturers Association has made a compelling case to the Commerce Department that specific types of cord-quality steel wire rod, tire cord and bead wire used in tires must be exempted from any trade restrictions being considered as part of its current market investigation in order to avoid a disruption in tire manufacturing in the U.S.

Overall, steel used in tire manufacturing is less than one percent of total U.S. steel production, so an exemption would not negatively impact steel manufacturers nationally. However, while tires aren’t a major factor in overall steel consumption, steel does play a vital role in the production of tires. Steel is a critical part of what makes a tire functional as well as safe to operate, and tires manufactured in the United States are responsible for safely transporting millions of Americans and millions of tons of goods each day.

Further, a restriction in tire manufacturing brought on by increased steel tariffs or quotas would threaten national security, given the U.S. military’s reliance on the industry to provide high performing and durable tires to aid our national defense. That’s why the type of rulemaking currently being considered by the Commerce Department must allow for sensible exemptions to ensure that vital national industries such as tire manufacturing remain intact, to avoid ripple effects in today’s integrated economy.

U.S. manufacturing has great potential for expansion, and we need to ensure laws and rules that help it to do so without potential unintended consequences that could disrupt critical and often unsung manufacturing sectors. With thoughtful approaches, we can continue to find favorable ventures here in the United States and add good-paying jobs that trigger positive impacts across the economy, to better the future for all Americans.