As the European Union (EU) signaled it would impose steep tariffs of up to 52% on Chinese tires, Korea's tire industry, which operates plants in China, has been thrown into anxiety. Hankook Tire & Technology (Hankook Tire), which has a local production system in Europe, is relatively relaxed, but Kumho Tire, which makes half of its Europe-bound volume in China, is on high alert.
According to the tire industry on the 12th, the European Commission recently completed the anti-dumping investigation it launched in May last year into Chinese passenger and light truck tires and notified each company of the provisional tariff rates. The EU is said to be planning to apply the tariffs starting on the 18th after collecting companies' opinions.
Domestic companies were split between winners and losers. Kumho Tire and Nexen Tire were hit with a "tariff bomb" of up to 29.9%, while Hankook Tire received the lowest tariff of 3.4%. The anti-dumping tariff rates were set differently by company, based on a comprehensive assessment of factors such as the share of China-made products in Europe-bound sales and the proportion of local European production.
Kumho Tire, which does not make tires locally in Europe and has a relatively high share of China production compared to other domestic rivals, was directly hit by the high tariffs.
Kumho Tire operates three plants in China—in Nanjing, Tianjin, and Changchun. About 30% of its total global output is produced in China. Roughly 50% of the volume it sells in Europe is made at its Chinese plants and exported.
To make its Europe-bound volume locally, Kumho Tire is building a new plant in Poland. The Poland plant is scheduled for completion in 2028. As Europe accounts for 33% of Kumho Tire's total sales, if the EU imposes high tariffs on Chinese tires starting on the 18th, its results are bound to deteriorate significantly for two years.
With a fire under its feet, Kumho Tire is pursuing plans to restructure its supply chain by allocating China production to its plants in Vietnam and in Korea (Gwangju, Gokseong, Pyeongtaek). However, many say it will be difficult to shift China volumes in the short term because the largest Gwangju plant has not fully restored capacity since a fire in May last year.
Hankook Tire, by contrast, has operated a plant in Hungary, a European country, since 2007, establishing a local production system. The Hungary plant's annual capacity is about 17 million tires, and Hankook Tire plans to raise annual capacity to 18.8 million by adding truck and bus tire lines through major expansion investment.
Hankook Tire also makes part of its Europe-bound volume in China, but the share is about 30%, lower than Kumho Tire's. In addition, being a large company, it was designated as a "mandatory respondent" during the anti-dumping investigation, allowing it to submit financials and cost data earlier than others and explain its case, which is cited as a reason it received the lowest anti-dumping tariff.
Nexen Tire has a plant in the Czech Republic, a European country, and its China production share is also low at 20%, but it was notified of a tariff rate similar to Kumho Tire's. The industry interprets that, compared with Hankook Tire, its smaller scale meant it was not designated as a mandatory respondent, which likely worked to its disadvantage.
Nexen Tire plans to respond by boosting the utilization rate of its Czech plant, currently at about 78%, and diverting China production to domestic plants and other sites.
The United States, the world's largest market, has also been imposing high tariffs on tires since last year after the Donald Trump administration took office, and Hankook Tire, with a high share of U.S. production, has suffered relatively less damage than other companies.
About 40% of the volume Hankook Tire sells in the United States is made at its plant in Tennessee. Kumho Tire also has a local plant in Georgia, but it accounts for only about 20% of its total U.S. sales.
An industry official said, "If Europe imposes high tariffs on Chinese tires as planned, the gap in results and market share among domestic companies will widen further," adding, "Kumho Tire and Nexen Tire have less capital than Hankook Tire and smaller global organizations, so they are highly likely to face difficulties quickly reorganizing overseas supply chains."