Cinda Securities: Under the impact of tariffs, tire brands' bargaining power is becoming more prominent

The Zhitong Finance App learned that Cinda Securities released a research report saying that if the current 25% tariff is actually implemented, it will be difficult for US demand for imported tires to drop drastically in the short term, and the US tire market faces the possibility of large price increases, and the future will be shared by US consumers, dealers, and tire manufacturers. For tire companies, there is also a “turning point” in the “crisis” of tariffs. On the one hand, Mexico's satisfaction with the US-Mexico-Canada FTA is not affected by “equal tariffs” and 232 tariffs. The global layout and close to the European and American consumer market layout is still an effective way for tire companies to avoid trade barriers. On the other hand, the bargaining power of tire brands is becoming more prominent under the impact of tariffs, requiring tire companies to enhance their technical strength and brand image.

Cinda Securities's main views are as follows:

US market: Sales of auto parts and tire stores are still at a high level in the same period in history. Gasoline and diesel consumption and automobile sales are relatively stable. Overall, downstream tire demand is relatively stable. In February 2025, retail sales of US auto parts and tire stores were US$10.257 billion, down 4.60% month-on-month and 0.92% year-on-year. In March 2025, US gasoline consumption was 8.7843 million b/d, up 2.90% month-on-month, down 2.00%; diesel consumption was 3.805,800 barrels/day, down 5.66%, up 1.44% year on year; US car sales were 1.5917 million units, up 30.27% month-on-month, up 9.39% year on year.

US import market: In February 2025, the number of semi-steel tires imported from the US was 16.0115 million, down 6.09% from the previous year, down 4.92% from the previous year; the number of all-steel tires imported from the US was 1.6012 million, down 6.85% from the previous year, down 12.34% from the previous year. In February 2025, US imports of semi-steel tires and all-steel tires were at a high level in the same period in history, and overall demand was still steady.

The US tariff policy has changed. It is recommended to pay attention to subsequent changes and strengthen the global layout and brand power enhancement strategy.

On March 26, the United States announced a 25% tariff on imported cars and certain auto parts in accordance with section 232 of the US Trade Expansion Act of 1962. On April 2, US President Trump signed an executive order on so-called “equal tariffs” at the White House, announcing that the US will levy a 10% “benchmark tariff” on all countries. On April 3, the US issued the 232 tariff rules for automobiles and parts. The scope of parts was expanded to include customs codes for all-steel tires and semi-steel tires. Mexican and Canadian products are exempt from the US-Mexico-Canada FTA. This means that within the 232 tariff, tires are no longer subject to equal tariffs, that is, tires imported from the US with ink removed and excluded are subject to a uniform 25% tariff. For example, if the original double anti-tariff is applied, the 232 tariff is superimposed with double anti-tariffs.

Cinda Securities believes that (1) there is still great uncertainty about US import tariffs, and subsequent changes still need to be observed. (2) If the current 25% tariff is actually implemented, it is difficult for the US demand for imported tires to drop sharply in the short term. The US tire market faces a large possibility of price increases, and the future will be shared by American consumers, dealers, and tire manufacturers. (3) For tire companies, there is also a “turning point” in the “crisis” of tariffs. On the one hand, Mexico's compliance with the US-Mexico-Canada FTA is not affected by “equal tariffs” and 232 tariffs. The global layout and close to European and American consumer market layout is still an effective way for tire companies to circumvent trade barriers. On the other hand, tire brands' bargaining power is becoming more prominent under the impact of tariffs, requiring tire companies to enhance their technical strength and brand image.

Key target: racing tires (601058.SH).

Risk factors: risk of falling demand due to macroeconomic downturn; risk of rising raw material costs or falling product prices; risk of economic expansion policies falling short of expectations; risk of increased international trade friction.