What is Antidumping and Countervailing Duties (AD/CVD)?

Antidumping Duties (AD)

What is Dumping?

Dumping occurs when a foreign manufacturer sells a product in the United States at a price that is lower than the price it charges for the same product in its home market or below the cost of production. This practice can harm U.S. industries by undercutting domestic prices and driving U.S. manufacturers out of the market.

What are Antidumping Duties?

Antidumping duties are additional tariffs imposed on imported goods that are determined to be dumped. These duties are intended to bring the price of the imported goods closer to the "normal value," which is the price at which the goods would typically be sold in the exporter’s home market. The goal is to prevent foreign companies from harming U.S. industries by selling goods at unfairly low prices.

Countervailing Duties (CVD)

What are Subsidies?

Subsidies are financial assistance provided by foreign governments to their domestic industries. These subsidies can take many forms, such as direct payments, tax breaks, or low-interest loans. Subsidies allow foreign manufacturers to lower their production costs, enabling them to export goods at prices lower than those of unsubsidized competitors.

What are Countervailing Duties?

Countervailing duties are tariffs imposed on imported goods that have been subsidized by foreign governments. These duties are designed to offset the benefit that the subsidy provides to the foreign manufacturer, thereby neutralizing the price advantage and protecting U.S. industries from unfair competition.

How Are AD/CVD Duties Determined?

The process for determining whether AD/CVD duties should be imposed involves two key U.S. government agencies: the U.S. Department of Commerce and the U.S. International Trade Commission (ITC).

1. Investigation by the Department of Commerce:

   • The Department of Commerce investigates whether dumping or subsidies are occurring and determines the margin of dumping or the amount of subsidy. This margin is expressed as a percentage of the export price and forms the basis for the AD or CVD duties.

2. Injury Determination by the ITC:

   • The ITC assesses whether the domestic industry has been materially injured or is threatened with material injury due to the dumped or subsidized imports. Both agencies must make affirmative findings for AD/CVD duties to be imposed.

3. Final Determination and Imposition of Duties:

   • If both the Department of Commerce and the ITC make affirmative determinations, AD/CVD duties are imposed on the imported goods. These duties are collected by U.S. Customs and Border Protection (CBP) at the time of importation.

Impact of AD/CVD Duties

AD/CVD duties can significantly impact both importers and domestic industries:

• For Importers:

  • Importers may face higher costs due to the additional duties imposed on the goods they bring into the U.S. This can lead to increased prices for consumers or reduced profit margins for businesses that rely on imported goods.

• For Domestic Industries:

  • Domestic industries benefit from the protection provided by AD/CVD duties, which help to level the playing field by countering unfair pricing practices by foreign competitors. This protection can help sustain jobs and investment in the U.S. economy.

Compliance and Documentation

Importers must ensure that they comply with AD/CVD regulations and provide accurate documentation to CBP. Failure to properly declare goods subject to AD/CVD duties or misclassification can result in penalties, fines, and increased scrutiny from customs authorities.