New Tax on Tires a Crunch on Consumers, Retailers

Consumers are already feeling the economic impact of a new tax on imported tires, which raised the price of tires from countries like China by 35 percent. But the new tax has had several ripple effects on the environment.

Some dealers and retailers began stockpiling imported tires prior to the tax enforcement, as a way of not losing money on future sales. The irony is that many states already impose a separate tax to prevent tire stockpiles in the first place, although this is of more concern for disposed tires than those ready for sale.

The EPA estimates that 45 percent of all scrap tires are burned for energy, also known as tire-derived fuel. Photo: Amanda Wills, Earth911.com

Another impact on the industry is that consumers are investigating alternatives to new tires, for which the import tax would not be in effect. One option is retreading an existing tire, which has shown 10 percent growth over the past three years. Retreading tires saves money and reduces the amount of tires that need to be disposed.

Consumers can also purchase used tires, which account for about 10 percent of tire sales in the U.S. annually. These tires must have 2/32 of an inch of original tread and have no visual defects, and they are often acquired from scrap tire recyclers.

There are no reports on an increase of used tire sales, but shipments of new tires are expected to drop 13 percent in the U.S. from last year. It’s expected that the real impact of the tire tax will occur in several months, when suppliers have run out of their stockpiles of imported tires.