Statement of Reasons—Initiation of investigation: Truck and Bus Tires (TBT 2026 IN)

Definition

[13] For the purpose of these investigations, subject goods are defined as:

Additional product information^{Footnote 6}

1. Market segments

[14] The TBT that are subject to these investigations are designed to be mounted on vehicles such as medium and heavy trucks, commercial trailers, buses, and recreational vehicles (RVs), that form part of the "commercial truck and bus" tire market segment.

[15] The market segment relevant to the subject goods is referred to within the tire industry by the abbreviations "TBT" (short for "Truck and Bus Tires") or "TBR" (short for "Truck and Bus Radial"). "TBR" is the more commonly used term. These terms do not have standard definitions, and the subject goods may include tires suitable for use on vehicles that might be classified as either "medium" or "heavy" duty.

[16] The subject goods do not include "PLT" (Passenger & Light Truck) market segment tires, which are designed for use on consumer passenger vehicles in the PLT market segment such as cars, light-duty and standard-size pickup trucks, minivans, SUVs and vans, and light trucks. The subject goods also do not include tires designed for use on motorcycles.

[17] The subject goods have rim sizes ranging from 17.5" to 24.5", but always with a rim size that ends in a half inch size ".5" (or nominal metric equivalent). In North America, passenger vehicle and light truck tire rim sizes are always denominated as a whole number (17", 19", 22" etc.) to distinguish them from commercial TBT.

[18] The subject goods only include tires rated partially or entirely for on-road use, which includes hybrid tires designed for both on-road and off-road applications, but the subject goods do not include tires that are specifically designed for vehicles in the Off-The-Road ("OTR") market segment.

[19] The subject goods do not include used (spent) tires or tire casings that are no longer suitable for highway use that have not yet been retreaded and does not include replacement tread rubber.

[20] Subject TBT may be imported either mounted on wheels or rims or not, and may be accompanied by other parts, e.g., a wheel, rim, axle parts, bolts, nuts, etc. However, subject goods do not include TBT that are imported already installed on vehicles.

2. Regulatory requirements

[21] CBSA Memorandum D19-12-2 discusses customs and "other government department" regulatory requirements for the importation of tires. The categories that CBSA uses to distinguish tires for import enforcement purposes are: (i) new on-road tires, (ii) used on-road non-truck tires, (iii) used on-road truck tires, (iv) new and used off-road tires, (v) retreaded, remolded, or recapped on-road tires, (vi) retreaded, remolded, or recapped off-road tires, (vii) rubber scrap, and (viii) exempt temporary importations. The subject goods include tires in CBSA categories (i), (iii), and (v) and potentially, any diverted subject goods from category (viii) that are not re-exported within specified time frames.

3. Construction type and physical composition

[22] The subject goods include all constructions of tires, including radial and bias.

[23] Regardless of type and design, the tires at issue are composed of several basic components including the following:

(a) Rubber compounds

A blend of natural and/or synthetic rubbers, together with fillers, reinforcements, sulfur, and other chemical additives, used to produce the various parts of the tire in accordance with the required mechanical and performance characteristics

(b) Innerliner

An airtight layer of synthetic rubber applied during the building process to seal the tire's interior and retain inflation pressure, replacing the traditional inner tube

(c) Body plies

Reinforcement layers made from textile cords and/or other reinforcing materials such as steel wire that provide strength to the tire structure and help contain inflation pressure

(d) Steel belts and reinforcement components

Steel belts, metal reinforcements, and other reinforcing plies used to provide strength and stability to the tread area and to contribute to durability and performance under load

(e) Beads

High-resistance metal wire hoops or bead bundles that ensure a secure fit between the tire and the rim

(f) Sidewall

Rubber components applied to the sides of the tire to protect the body plies and provide resistance to abrasion, scuffing, weathering, and lateral impacts

(g) Tread

The outer rubber component that comes into contact with the road and provides grip, traction, and resistance to wear

4. Size

[24] The three relevant measurements that determine the "size" of a particular truck and bus tire are: (1) rim diameter, which in Canada is always expressed in imperial measurement (inches); (2) width, which may be expressed in either inches or millimeters; and (3) aspect ratio, which signifies the tire's sidewall height as a percentage of tire width.

5. Tread pattern

[25] Tread design is proprietary and differs for each brand and model of tire. All tread design types are considered like goods.

6. Load range, ply rating and load index

[26] Load range and ply rating are markings that may appear on the side of a tire sidewall that identify how much load the tire can safely carry at a specified inflation pressure. "Load range" and "ply rating" are units of measurement published by the United States (U.S.) Tire and Rim Association and are in common use in Canada although not prescribed by Canadian regulation. Ply rating is a historical tire strength measurement expressed in equivalent number of rubber plies that there would be in a bias ply tire of the same strength. Load range is an alphabetical code from B through M that indicates a tire's maximum carrying capacity at a specific inflation pressure.

[27] The subject goods include all load and ply ranges that are applicable to goods of the relevant rim size suitable for use on trucks and busses that are not light trucks or OTR vehicles. Products of varying load and ply ranges may form part of the same class of goods and compete with domestically produced TBR tires. Subject goods would normally be expected to have a load range of "G" or greater or a "ply rating" of 14 or higher, although the Canadian Motor Vehicle Safety Regulations set out parameters for "large motor vehicles" as tires with a load range of not less than D or a ply rating of not less than 8. Light truck tires, which are excluded from the scope of subject goods, may have load ranges ranging from "B" to "F", corresponding to ply ratings from 4 to 12, so there is some overlap.

7. Brand reputation, mileage expectation and "tiers"

[28] A marketing terminology in common use within the tire industry is the concept of "Tiers". "Tiers" are a way to loosely position a particular tire brand along a spectrum of quality based on the reputation of the manufacturer, which is in turn based on aspects of design, construction, input materials, performance in particular use applications, and the expected kilometer mileage of the tires. "Tier" designations are subjective and driven by the reputation of the manufacturer and subjective perception within the marketplace of a particular brand's quality. For retreaders, the terminology of "Tiers" also refers to the expected number of times that a particular tire's casing can be retreaded, subject to actual condition and use.

Production process^{Footnote 7}

[29] While the production process for new tires and retreaded tires differs in some respects, there are many similarities between the two processes and they result in products that directly compete with one another in the Canadian market.

New tires

[30] The manufacturing process for new TBT involves multiple stages, including raw material preparation, component fabrication, tire assembly, curing, quality inspection, and testing. According to the complainants, the production process for new TBT is materially the same regardless of the quality "Tier" of the tire; the main differences are in the product's design and the quality and proportion of the raw materials used, such as proprietary rubber formulas.

Raw material preparation

[31] The process begins with the preparation of raw materials known as rubber compounds. There are two types of rubber that can be used: natural rubber and synthetic rubber. In addition to rubber, reinforcing fillers such as carbon black and silica, metal reinforcements, textile materials, sulfur, and other chemical additives are incorporated into the compounds to create the exact specifications for the particular tire type.

Component fabrication

[32] Once the raw materials are prepared, individual tire components are produced, which include the inner liner, body plies, steel belts, sidewalls, beads, and tread. Each component is produced separately using processes such as extrusion, calendaring, coating, and wire preparation to create the appropriate shape, thickness, and reinforcement structure.

[33] The inner liner consists of an airtight layer of synthetic rubber that seals the tire interior. Reinforcement components include textile cords and metal-reinforced plies. The beads consist of high-resistance metal wire hoops that ensure a secure fit between the tire and rim.

Tire assembly

[34] The tire manufacturing process begins on a specialized piece of machinery known as the building drum, a rotating cylinder equipped with an inflatable center. Building drum is where the various components are assembled in a specific sequence. First, an inner liner made up of a sheet of airtight synthetic rubber is applied to the building drum. This liner is fundamental as it replaces the traditional inner tube and seals the tire's interior. Second, a matrix of textile plies or textile cords designed for reinforcement is added atop the initial layer. Then, the side walls are bolstered. To bolster the side walls, additional layers are introduced enhancing durability.

[35] Central to the tire's design are the bead wires, high-resistance metal hoops that ensure a secure fit onto the rim. These are meticulously installed with the casing ply folded over to anchor everything in place. To protect against the rigors of mounting and to provide additional rigidity, layers of protective rubber and adhesive are applied with precision tools and techniques employed to eliminate any trapped air bubbles. In an essential step, sidewall components crafted from flexible, resistant rubber are adhered to shield the tire from lateral impacts. Advanced technology, including laser markets and RFID chips are utilized to ensure precision and traceability throughout the manufacturing process.

[36] At the end of this stage, the assembled but uncured tire is referred to as a "green tire." Although it has the form of a finished tire, it has not yet undergone curing.

Curing

[37] Once assembly is complete, the green tire is placed into a mold and subjected to heat and pressure in a curing press. During this process, an internal bladder applies pressure to force the uncured material into the mold, forming the tread pattern and sidewall markings. Heat initiates vulcanization, a chemical reaction involving sulfur and rubber that bonds the tire components together and transforms the rubber from a plastic state to the final elastic form of tire. The length of time for the curing process varies depending on the size of the tire.

Quality inspection/testing

[38] The final step is quality control, which is integrated throughout the manufacturing process. Tires are inspected and tested at multiple stages of production to ensure that they meet the producer’s manufacturing specifications and safety requirements. Final inspection procedures verify the structural integrity and uniformity of each tire before it is released for distribution.

[39] All finished tires undergo aspect inspection, meaning a visual inspection for surface defects and uniformity. In addition, a sample of produced tires undergo further non-destructive testing methods to assess internal and external integrity, including sampling for uniformity and X ray inspection in accordance with Michelin's quality-control protocols. These methods may include X-ray analysis, shearography, echography, ultrasound, and architecture verification. X-ray analysis is a non-destructive method used to inspect the internal structure of a tire for defects not visible to the naked eye, such as broken steel cords, structural separations, or misalignments.

1. Shearography is a laser-based, non-destructive inspection method used to identify subsurface anomalies within a tire's structure – such as separations, voids, or blisters
2. Echography refers to non-destructive inspection techniques that use acoustic or similar technologies to analyze the internal structure of a tire
3. Ultrasound inspection uses high-frequency sound waves to assess tire integrity and detect internal defects without dismantling the tire
4. Architecture verification refers to the assessment of a tire's structural design and construction to ensure compliance with performance, safety, and durability requirements

[40] Tires may also undergo performance testing in service conditions or on vehicles to verify operational safety and performance characteristics.

Retreaded tires

[41] Tire "retreading" is a process by which used tire casings, whose treads are worn such that the tire is no longer road-worthy, are recovered, and remanufactured through the addition of new tread to the existing casings, thereby extending their useful lives as opposed to scrapping the otherwise unusable casing. These products are commonly referred to in the tire industry as "retreads".

[42] Retreads have all the same uses and characteristics as new TBT, and they are sold to the same customers (principally commercial truck and bus fleet operators) through the same channels of distribution.

[43] Retreads are produced using spent tire casings, new tread rubber, and other chemicals, paints, and adhesives as input materials. The spent casings undergo a further manufacturing process in which the worn tread material is removed and shaved down, the casing is repaired and patched, new tread rubber is applied, and the whole tire is re-vulcanized to create a permanent bond. Without retreading, the spent tire would go to a landfill. In this sense, the retreading process is equivalent to the manufacture of new products from recovered scrap materials.

[44] Retreaded tires are a cost effective and environmentally friendly tire option for bus and truck fleet operators because it extends the usable life of spent tires that would otherwise be discarded as scrap or waste.

[45] Retreads are produced through the following process steps, which are described in more detail in Kal Tire's public witness statement and share many of the same production steps as a new tire:

Initial inspection

[46] Tires undergo visual and automated tests to ensure they are in good enough condition for retreading. A shearography process looks for separation between belt layers, and puncture holes are detected electrically.

Buffing

[47] Tires undergo computer-controlled buffing to deliver precise crown contours and consistent under-tread thickness.

Skiving and repair

[48] Tires with holes are patched or repaired, addressing surface imperfections to ensure adhesion of the tread.

[49] Application of Cushion Gum and New Tread: A layer of non-vulcanized gum rubber with even thickness is applied, followed by a pre-vulcanized tread. An envelope and arc band is attached to ensure an air-tight seal.

Curing

[50] Tread rubber is strengthened in a curing chamber, under tight time, temperature, vacuum, and pressure control.

Final inspection and testing

[51] Retreads are inspected and tested, and the sidewalls are painted.

[52] Most retreaders are franchised licensees of proprietary retreading processes developed by the major tire manufacturers. There are three principal retreading processes used in Canada:

1. Bandag® – owned by Bridgestone
2. Michelin® Retread Technologies ("MRT") and Oliver® Rubber Company – owned by Michelin and
3. UniCircle® – owned by Goodyear

[53] Each process entails its own unique retreading equipment and replacement tread rubber, which are available for purchase from the process owner. Any process can be used to retread any tire casing; there are no technical or contractual constraints on the type of tire casings that can be retreaded using a particular company's process and replacement treads.

[54] Although retreading differs from the manufacture of a new tire from raw materials because it reuses the original casing, it nevertheless transforms material inputs through a manufacturing process into a finished retreaded tire for sale or supply in the Canadian TBT market through similar steps in the manufacturing process involving preparation of input materials, tire assembly, curing, and quality inspection and testing. The remanufactured TBTs can then be used in lieu of purchasing a brand new TBT.

[55] Tire casings can only be retreaded if they meet a certain quality standard in the casing's original construction, rubber thickness, placement of internal steel cables and overall quality of materials. Tire casings with inferior quality rubber and internal cabling do not stand up to the secondary vulcanization process necessary to retread a tire. While there is no legally-prescribed certification process for retreaded tires in Canada, a retread must meet the quality control standards of its particular retreading process, and retreaders are subject to audit by the process licensor to ensure they meet applicable standards.

[56] Used tire casings and the retreads produced from them are assigned grades based on their quality and substitutability to new tires, and whether they can be retreaded additional times. For example, "A" grade casings are considered highest quality and a retread produced from an "A" casing is comparable in quality and mileage to Tier 2 new tires, while retreads made from a "C" grade casing may be equivalent to a Tier 3 tire. For this reason, there is as much price variation among retreads as there is within new tires. Retreads are not always cheaper than new tires; the relative pricing would depend on the tier of the new tire against which the retread is competing.'c

Classification of imports

[57] The allegedly dumped and subsidized goods are normally imported under the following tariff classification numbers:^{Footnote 8}

1. 4011.20.00.13
2. 4011.20.00.19
3. 4012.12.00.00

[58] The listing of tariff classification numbers is for convenience of reference only. The tariff classification numbers include non-subject goods. Also, subject goods may fall under tariff classification numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

Like goods and class of goods^{Footnote 9}

[59] Subsection 2(1) of SIMA defines “like goods” in relation to any other goods as “… (a) goods that are identical in all respects to the other goods, or (b) in the absence of any such goods…, goods the uses and other characteristics of which closely resemble those of the other goods.” In considering the issue of like goods, the Canadian International Trade Tribunal (CITT) typically looks at a number of factors, including the physical characteristics of the goods, their market characteristics, and whether the domestic goods fulfill the same customer needs as the subject goods.

[60] With respect to the definition of like goods, the complainants stated that the subject goods are like goods to the goods domestically produced by Michelin Canada and the CRMA members, both in terms of physical (composition, production methods, and appearance) and market characteristics (substitutability, pricing, distribution channels, and end uses). As a result of this substitutability, purchasing and contract decisions are made primarily on price.

[61] For the purposes of these investigations, like goods consist of domestically produced TBT described in the product definition.

[62] The complainants state that new and retreaded TBT comprise a single class of goods as the physical and market characteristics are so similar that they compete against the entire spectrum of the TBT market in Canada. The complainants also state that new and retreaded TBT also comprise a single class of goods despite the minor variations in quality tiers and longevity.

[63] After considering questions of end-use, physical characteristics, and all other relevant factors, the CBSA is of the opinion that subject goods and like goods constitute only one class of goods.

Domestic producers

[64] According to the complainants, Michelin Canada and the supporting CRMA members represent the majority of domestic production of like goods in Canada, with the remaining domestic production attributed to other TBT retreaders.^{Footnote 10} Based on information provided in the complaint and its own research, the CBSA sent Standing RFIs to 31 potential producers of like goods in Canada to determine whether they produce like goods and to obtain data for the purposes of determining standing. The questionnaires were sent to the potential producers on the same day the CBSA determined that the complaint was properly documented.

[65] Of the 31 companies contacted, seven replied to the CBSA, which includes the five from the previously mentioned supporting producers.

Estimates of domestic production

[66] The complainants estimated that its own production represents over 50% of the total domestic production of like goods, with the remaining domestic production attributed to like goods produced by other retreaders. The complainants stated that Michelin is the only manufacturer of new TBT in Canada and provided its own specific production figures for Michelin and the participating CRMA members. The complainants also states that many of the other retreaders are small, single-shop operators and provided an estimate of the total production volume of like goods for these retreaders.^{Footnote 11}

[67] Based on the information in the complaint and the data provided by respondents to the CBSA’s Standing RFI, the complainants accounted for the majority of the production of TBT in Canada in 2025 and in the first quarter of 2026.

Standing

[68] Pursuant to subsection 31(2) of SIMA, the following conditions must be met in order for an investigation to be initiated:

1. the complaint is supported by domestic producers whose production represents more than 50% of the total production of like goods by those domestic producers who express either support for or opposition to the complaint and
2. the production of the domestic producers who support the complaint represents 25% or more of the total production of like goods by the domestic industry

[69] Based on an analysis of information provided in the complaint, as well as the information gathered by the CBSA, the CBSA is satisfied that the standing requirements of subsection 31(2) of SIMA have been met.

The Canadian market

[70] The complainants, using Statistics Canada import data,^{Footnote 12} estimated the total volume and value of imports, under the tariff classification numbers listed in the complaint, from China, the U.S., and all other countries for the period from January 1, 2010, through April 2026. The complainants’ analysis compared the import volumes and values of TBT from January 1, 2022 to March 31, 2026.^{Footnote 13}

[71] The CBSA conducted its own independent review of imports of TBT from the CBSA’s Electronic Facility Information Retrieval Management (eFIRM) database and the CBSA Assessment and Revenue Management (CARM) system using the tariff classification numbers under which the subject goods are imported from China, the U.S., and all other countries. In addition, the CBSA reviewed its Accelerated Commercial Release Operations Support System (ACROSS) data to correct any errors and remove non-subject imports.

[72] Detailed information regarding the sales from domestic production by the complainants, as well as the volume of imports of subject goods, cannot be divulged for confidentiality reasons. The CBSA, however, has prepared the following table to show the estimated import share of subject goods in Canada.

[73] The CBSA will continue to gather and analyze information on the volume and value of imports during the period of investigation (POI), from April 1, 2025 to March 31, 2026, as part of the preliminary phase of the dumping and subsidy investigations and will refine these estimates.

Section 20 allegations

[81] Section 20 is a provision of SIMA that may be applied to determine the normal value of goods in a dumping investigation where certain conditions prevail in the domestic market of the exporting country. In the case of a prescribed country under paragraph 20(1)(a) of SIMA, it is applied where, in the opinion of the CBSA, the government of that country substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.^{Footnote 14}

[82] The CBSA initiates dumping investigations on the presumption that section 20 is not applicable to the sector under investigation, unless there is information that suggests otherwise.

[83] A section 20 inquiry refers to the process whereby the CBSA collects information from various sources in order to form an opinion as to whether the conditions described under subsection 20(1) of SIMA exist with respect to the sector under investigation. Before initiating an inquiry under section 20, the CBSA must first analyze the information submitted in the complaint and the evidence it has gathered independently to determine if it is sufficient to warrant the initiation of an inquiry.

[84] The complainants allege that the conditions described in section 20 of SIMA prevail in the tire sector in China. That is, the complainants allege that this industry sector in China does not operate under competitive market conditions and consequently, the domestic prices of TBT established in China would not be reliable for determining normal values. The complainants submitted that the tires sector is the relevant sector for a section 20 analysis, as it encompasses the production of TBT (i.e., the subject goods).

[85] In support of their allegations, the complainants provided evidence of state ownership and control of major producers in the tire sector and associated industries; government plans, policies and directives impacting the tire sector and associated industries; the role of industry associations as a tool of government control; systemic and sectoral distortions in China, including with respect to electricity and fossil fuel production; government intervention in the cost of production of raw material inputs, notably synthetic and natural rubber and steel; and extensive financial supports and subsidization of TBT producers. The complainants also provided pricing data comparing Chinese domestic prices of key input materials (carbon black, steel wire rod, and natural rubber) and TBT with prices from market-economy sources.

[86] The information provided by the complainants suggests a level of government influence in the tire sector, including TBT. The complainants allege that the market distortions and cost advantages provided to Chinese carbon black, steel wire rod, natural and synthetic rubber, and related inputs translate directly into distortions to the prices of the subject goods in China.

[87] For purposes of the section 20 analysis, the CBSA considers the tire sector to be the relevant sector. The CBSA has reviewed the information provided in the complaint and conducted its own research. Based on this information, the CBSA believes that there is reasonable evidence to support an inquiry into the allegations that the measures taken by the Government of China substantially influence prices in the tire sector in China, and that the prices are substantially different than they would be in a competitive market.

[88] Consequently, on August 31, 2026, the CBSA included in its investigation a section 20 inquiry in order to determine whether the conditions set forth in paragraph 20(1)(a) of SIMA prevail in the tires sector in China.

[89] As part of this section 20 inquiry, the CBSA sent Section 20 RFIs to all potential producers and exporters of TBT in China, as well as to the Government of China, requesting detailed information related to the tires sector in China.

[90] In cases where conditions of section 20 exist, pursuant to paragraph 20(1)(c), the normal value can be determined based on profitable selling prices or full costs of production and an amount for profit on goods sold domestically in a surrogate country, to which the conditions described in section 20 of SIMA are not applicable.

[91] For the purposes of obtaining information necessary to calculate normal values, pursuant to subparagraph 20(1)(c) of SIMA, the CBSA requested information from producers in a surrogate country. The CBSA has selected the U.S. as the primary potential surrogate country and has sent questionnaires to known producers of TBT in that country.

[92] Additional market-economy countries with significant production or exports of like goods may also be considered as potential surrogates. In the event that the CBSA does not receive sufficient information from producers in the selected surrogate country for the purposes of determining normal values pursuant to section 20, the CBSA may identify other surrogate countries at a later date.

[93] Importers will be requested to provide information on sales of like goods produced in the surrogate countries, in the event that normal values must be determined under paragraph 20(1)(d) of SIMA.

[94] In the event that the CBSA forms an opinion that domestic prices of TBT in China are substantially determined by the government, and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be if they were determined in a competitive market, the normal values of the goods under investigation will be determined, pursuant to paragraph 20(1)(c) or 20(1)(d) of SIMA, where such information is available.

[95] Normal values determined pursuant to paragraph 20(1)(c) of SIMA are determined on the basis of the domestic selling prices or the aggregate of the cost of production, a reasonable amount for administrative, selling, and all other costs, and a reasonable amount for profits of like goods sold by producers in any country designated by the CBSA and adjusted for price comparability.

[96] Normal values determined in accordance with paragraph 20(1)(d) of SIMA are determined on the basis of the selling price in Canada of like goods produced and imported from any country designated by the CBSA and adjusted for price comparability.

Normal value

Complainant’s estimates of normal value

Section 15

[97] The complainants stated that sufficient information was not available to estimate normal values pursuant to section 15 of SIMA. As a result, the complainants were unable to estimate normal values on the basis of section 15 of SIMA.^{Footnote 15}

Section 19(b)

[98] The complainants estimated normal values using a constructed cost approach based on the methodology in paragraph 19(b) of SIMA, calculated based on the aggregate of estimates of the cost of production of the subject goods, a reasonable amount for administrative, selling and other costs and a reasonable amount for profits.

[99] As detailed costs of production of TBT producers in China were not available, the complainants estimated the costs of production of TBT in China using:

• a combination of a proportional breakdown of public index pricing for raw materials with Michelin’s raw material costs, which consist of rubber, metallic reinforcement materials, fillers and chemicals for vulcanization and protection (direct material)^{Footnote 16}
• Direct and indirect labour costs from Michelin, adjusted to reflect the difference between manufacturing wages in Canada and China^{Footnote 17} and
• Michelin’s factory overhead costs^{Footnote 18}

[100] To estimate a reasonable amount for administrative, selling and other costs, and a reasonable amount for profits for the subject goods from China, the complainants relied on the publicly available financial results of Sailun Group Co. Ltd., Shandong Linglong Tyre Co. Ltd., and Aeolus Tire Co. Ltd., three producers of TBT with factories in China. Using this information, the complainants estimated a reasonable amount for administrative, selling and other costs; financial expenses; and profits as a percentage of the costs of production for 2025.^{Footnote 19}

Section 20

[101] While the complainants alleged that section 20 conditions exist is China’s tire sector, the complainants did not provide an estimate of normal values in accordance with section 20 of SIMA.

CBSA’s estimate of normal value

[102] The CBSA reviewed the complainants arguments pertaining to Chinese TBT pricing and agrees that there is insufficient information available to reasonably estimate normal values pursuant to section 15 of SIMA. In conducting it’s own research, the CBSA was unable to obtain other pricing information that would be appropriate to use for this purpose. Therefore the CBSA is unable to estimate normal values following the methodology described in section 15 of SIMA.

[103] For the purposes of initiation, the CBSA estimated normal values using a constructed cost approach based on the methodology of paragraph 19(b) of SIMA, calculated based on the aggregate of the estimated cost of production of the goods, a reasonable amount for administrative, selling and other costs, and a reasonable amount for profits. The CBSA reviewed the complainant’s methodology to determine how normal values were estimated and found that the approach was reasonable.

[104] The CBSA acknowledges that there is reasonable indication that the conditions of section 20 may exist in the tire sector in China. As detailed in the preceding section, the CBSA has initiated a section 20 inquiry into the tire sector in China. Information gathered from the inquiry will enable the CBSA to form an opinion on whether section 20 conditions exist in China’s tire sector and, if warranted, to determine dumping margins using information from surrogate producers.

Export price

Complainants’ estimates of export price

[105] The complainants estimated export prices based on Statistics Canada quarterly import data for TBT during the period of review. The complainants assume that the declared customs values in the data represent ex-works selling prices in accordance with standard customs valuation principles. Therefore, no adjustments were made to remove transportation costs.^{Footnote 20}

CBSA’s estimates of export price

[106] In order to estimate the export price for the subject goods imported into Canada, the CBSA used information available through CARM, eFIRM, and ACROSS. The CBSA was able to obtain sufficient information on importations of Chinese TBT and used this information to estimate export prices.

Estimated margins of dumping

[107] For the purposes of the initiation of the investigation, as previously mentioned, the CBSA has estimated a margin of dumping using normal values based on the methodology of paragraph 19(b) of SIMA.

[108] The CBSA estimated the margin of dumping for the subject goods by comparing the estimated weighted-average normal values with the estimated weighted-average export prices for five benchmark products, over the period of April 1, 2025 to March 31, 2026.

[109] The CBSA estimates that subject goods from China were dumped by 29.1%, expressed as a percentage of the export price. As such, sufficient evidence is available to support the allegations that subject goods originating in or exported from China have been dumped.

Subsidy programs in China

[116] In alleging that actionable subsidies were applicable to the subject goods imported from China, the complainants relied on previous CBSA subsidy investigation findings on various consumer products and other investigative authorities’ investigations into TBT. The complainants also relied on publications issued by the World Trade Organization (WTO) and other publications.

[117] In particular, the complainants alleged that the Government of China provides substantial subsidies to its tire industry, such as cash grants, preferential financing, special tax rebates, VAT and tariff exemptions, land-use rights, discounted inputs and discounted utilities.

[118] The complainants argued that the numerous recent findings from other investigative authorities that Chinese TBT were subsidized provided strong evidence that such producers continued to receive subsidization. In support of their position, the complainants referenced and cited four subsidy determinations issued by authorities in other jurisdictions concerning Chinese TBT.^{Footnote 21}

[119] The complainants identified numerous potential subsidy programs that producers and exporters of TBT in China may have benefitted from. The complainants listed several grant and grant equivalent programs, preferential financing programs, preferential tax programs, relief from duties and taxes, provisions offered at less than adequate remuneration programs, and grants and tax relief related to preferential economic development zones and other types of programs. The most common support provided by the complainants consists of information from determinations and sunset reviews in other jurisdictions of TBT. The complainants also relied on past CBSA findings, and China’s most recent notification of active subsidy programs to the WTO in 2025.

[120] The complainants alleged that these subsidy programs are actionable and/or countervailable and that the subsidies are neither negligible nor insignificant. The complainants also claimed that the programs are either used by or are available for use by producers and exporters of TBT in China. The complainants also alleged, with support, that there are various Chinese producers and exporters of TBT that operate in special economic zones, giving them access to numerous subsidy programs and preferential treatment.^{Footnote 22}

[121] As a result, based on the information available, the CBSA identified 50 potentially actionable subsidy programs that may have benefited Chinese producers/exporters of TBT. These programs have been grouped into the following four categories:

1. Grants and grant equivalents
2. Preferential financing
3. Taxation and tariff reduction programs and
4. Government provision of goods and services for less than adequate remuneration

[122] The CBSA’s analysis revealed that the alleged subsidy programs constitute potential financial contributions by the Government of China that may have conferred benefits to producers/exporters of TBT. In addition, the programs were further examined and were considered to be potentially specific either in law or in fact within the meaning of subsections 2(7.2) and 2(7.3) of SIMA.

[123] The list of the identified programs to be investigated are found in the Subsidy RFI.

[124] If more information becomes available during the investigation process that indicates that some exporters/producers of subject goods may have benefited from any other programs during the POI, the CBSA will request complete information from the Government of China and exporters/producers of subject goods to pursue the investigation of these programs.

CBSA’s subsidy conclusion

[125] Sufficient evidence is available to support the allegations that TBT originating in or exported from China have been subsidized. In investigating these programs, the CBSA has requested information from the Government of China, exporters and producers to determine whether exporters/producers of subject goods received benefits under these programs and whether these programs, or any other programs, are actionable subsidies and, therefore, countervailable under SIMA.

Estimated amount of subsidy

[126] The complainants were unable to estimate the amounts of subsidy on a program basis for the subject goods imported from China. Instead, the complainants estimated the amount of subsidy as being the difference between the weighted average export prices and the cost of production and comparing these results to the export prices. Using this methodology, the amount of subsidy was estimated to be between 12.9% and 58.4%.

[127] It is the CBSA’s understanding that subsidies have the effect of lowering the full cost of the goods, including the cost of production and the amount for selling, administrative and all other costs, which allows exporters to pass-through the subsidy benefits in reducing the selling price of those goods to Canada. Therefore, the CBSA is satisfied that the exporter’s ability to sell subject goods to Canada at prices substantially below their estimated full costs supports the complainants’ allegations that subsidies are being conferred on the exported goods.

[128] The CBSA estimated the amount of subsidy conferred to exporters of the subject goods from China by comparing the estimated full costs of the subject goods with their estimated export prices, using the costing and export price methodologies explained in the evidence of dumping section.

[129] The CBSA’s analysis of the information indicates that subject goods imported into Canada, during the period of April 1, 2025 to March 31, 2026, were subsidized and that the estimated amount of subsidy is 23.9% of the export price.

CBSA’s injury conclusion

[175] Overall, based on the evidence provided in the complaint, and supplementary data available to the CBSA through its own research and customs documentation, the CBSA finds that the evidence discloses a reasonable indication that the dumping and subsidizing of the subject goods from China, have caused injury to the TBT industry in Canada in the form of:

• increased volume of imports of subject goods
• price undercutting and price suppression
• lost sales, decline in revenues, and downstream price effects
• loss of volume and market share
• decline in production levels and capacity utilization
• decline in employment and productivity
• decline in financial performance and profitability and
• decline in return on investment