What is an Antidumping Duty, and How Does It Affect Importers?

What is an Antidumping Duty, and How Does It Affect Importers?

Antidumping duty, or ‘AD,’ and countervailing duty, or ‘CVD,’ are two of the key ways that the International Trade Administration and Customs and Border Protection (CBP) work together to protect US businesses. AD/CVDs are safeguard actions, known as Trade Remedies, that are intended to utilize these organizations’ unique position to balance the marketplace and keep US businesses competitive in an increasingly large global marketplace. 

But what is ‘dumping?’ And, maybe more importantly, what specifically are antidumping duties? Is there a difference between an antidumping and countervailing duty? Read on for the answer to all these questions and more as we explore the antidumping duty and how it may affect you as an importer. 

Terminology - Dumping, Antidumping, and Countervailing Duties

‘Dumping,’ at its most simplistic, is when a foreign company sells its product in the US at a significantly lower price than it would be able to sell it in its domestic country or domestic market, or at a price that is lower than its cost of production. Essentially, it is ‘dumping’ its product into the US at a rate that is impossible to compete with domestically. 

Antidumping duties’ are duties that add additional fees to imports that are suspected to be ‘dumped’ in the US. These fees are typically assessed on a case-by-case basis, and the introduction of these duties is usually tied to a complaint or concern from a domestic industry. The classic example is the US steel industry which routinely utilizes antidumping duties as it competes with a global market that is filled with competitive steel-producing countries. 

‘Countervailing Duties’ (CVD) are similar to antidumping duties in that they work to balance the scales of the global marketplace. The key difference is that countervailing duties are implemented to address foreign governmental regulations that allow for the same kind of unfair pricing advantage dumping does. This can come in the form of significant government subsidies or loosened regulations that make the production and manufacture of certain products cheaper in a foreign country than what is possible in the US.

Who Benefits from Antidumping Duties?

At any given moment, around 30 trading partner countries export products to which the US maintains an antidumping and countervailing duty. In general, these duties come and go based on an industry's concerns at one specific moment in time. These are not regulations that are built and enacted to exist into perpetuity. 

Typically, they come from industries that see a change in the market that has caused them to be injured by unfair competition as a result of dumping or subsidization of a product. The industry then requests an AD/CVD investigation from both the Department of Commerce and the US International Trade Administration (ITA), which will determine whether this is a case for dumping and act accordingly.

Should a case for dumping be found, and new cases are initiated and closed quite frequently, additional rates can be instituted from less than 1% to over 250% of the import value of the good. AD/CVD rates can be applied to everything from steel to wooden bedframes to shrimp and anything in between.

So, who benefits from antidumping duties? Current American domestic producers tend to be the ones who benefit most, but these regulations also provide a safety net and options for future industries.

What Should I Know as an Importer? 

An awareness of these AD/CVDs is incredibly important to US importers for a few reasons. The first and most obvious is that being hit with a surprise duty on a product you didn’t know was under an AD/CVD is going to be a shock when your import arrives at Customs. There is also a suite of additional information that you, as the importer of record, will be required to provide if you are importing AD/CVD-regulated goods.

For example, you will need to have proof that you are not being reimbursed by the manufacturer for the cost of the AD/CVD duty. Additionally, you will need to also have the legal address and name of the manufacturer and exporter since AD/CVD cases are assigned based on information provided by the manufacturer to the International Trade Administration - different firms can receive higher or lower AD/CVD rates. In many cases that’s just where it begins, and often the amount paid at the time of entry is simply a deposit with the duty increase bill potentially coming months or even years later.

As always, with complex matters like antidumping and countervailing duties, we recommend you contact the team at PCB before you make purchasing decisions for goods that are new to your firm. Our tariff relief experts can research the applicable duties of the product before you buy and advise you on duty-free options. Together, we can find an import that makes the most sense for you and your bottom line, so don’t hesitate to reach out if you are considering a new initiative.

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About Author
Breanna Leininger

Breanna has been in the industry since 2004 and has dealt with clearances and compliance concerns for a multitude of commodities for all ports of entry and all modes of transportation. She has a Bachelors in Communications, Bachelors in Political Science & Government, is a Licensed Customs Broker as well as Certified Customs Specialist. Breanna has been asked to be the speaker in a variety of events including the BC Agriculture Show, Doing Business in the US seminar and has been a contributor to Small Business BC publications. She was recently nominated for the NCBFAA Government Affairs Conference Emerging Leaders and Mentors by the NBCBA. She participates in the Northern Border Customs Brokers Association and the NCBFAA annual conferences in Washington, DC. Breanna has a deep passion for politics, global affairs, and how communication shapes policy and international business relationships. She feels very fortunate to work in an industry that allows her to take part in how policy impacts the global economy and domestic businesses of all shapes and sizes.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.
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