With the petition filed by Webb for anti-dumping duties (ADD) and countervailing duties (CVD) on 15” to 16.5” brake drums from China and Turkey, drum prices will go up. After all, Webb filed the petition because they cannot profitably sell brake drums in the U.S. market since customers are not willing to pay a premium for US made products. Once any anti-dumping or countervailing duties are assessed, that will effectively raise the imported drum prices, which will allow US made drum prices to increase as well.
The only two domestic manufacturers of 15” to 16.5” brake drums are Webb and Gunite/Accuride, which combined, do not have enough capacity to fully supply the US OEM and aftermarket demand. Thus, a certain amount of brake drums will need to be imported at a higher cost than present and will result in an overall increase in the market price to each OEM, WD, and dealer. This will increase costs to fleets and owner-operators, and ultimately the consumer. In 2018, when the “Trump” tariffs on goods from China increased import price by 25%, US wholesale and retail prices of brake drums and all other brake parts increased by more than the tariff cost.
A countervailing duty is an import tax that a country imposes on goods from another country to counteract the negative effects of subsidies given by that country’s government. CVDs are also known as anti-subsidy duties. The CVD duty percentage is likely to be known and imposed in late November 2024. Antidumping duty is a tax imposed on imported goods to compensate for the difference between their export price and their normal value. The purpose of antidumping duty is to protect local businesses and markets from unfair competition by imports. The ADD duty percentage is likely to be known and imposed in late February 2025. Any drums that are imported into the United States after late November 2024 will be subject to these additional duties.
Based on the additional duties added to importing brake drums in the US, here is our prediction on brake drum prices over the next year:
We believe that wholesale prices of brake drums will increase by approximately 35% over the next year due to added costs of ADD and CVD. In addition, this disruption could also lead to inventory and availability challenges which could replicate the pricing disruption that happened during COVID.
What Should You Do?
Most distributors and dealers will probably do nothing. If prices increase, they will get drums for a more expensive price and be able to sell them at a more expensive price…. eventually, once “old” inventory depletes. Those who have cash, space, and foresight will buy inventory and obtain a significant ROI on their brake drum inventory. What will you do?
NOTE: This anticipation of ADD and CVD tariff is based purely on speculation and not due to any insight on the cost differential of manufacturing overseas from US domestic production costs. The exact pricing is based on a current sample DuraBrake price to a particular customer and the anticipated pricing to that same customer.
