Countervailing duty

What is countervailing duty in freight shipping?

A countervailing duty (CVD) is an import tax imposed by governments to offset the impact and cost effect of subsidies from foreign governments. It's charged in addition to the stated amount in the Harmonized Tariff Schedule (HTS), as well as any additional fees required on each individual import.

Countervailing duties are imposed after an investigation finds that a foreign nation subsidizes its exports, damaging domestic producers in the importing country. Countervailing is a key area of trade facilitation and enforcement in the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA).

Countervailing duty vs. antidumping

Dumping occurs when foreign manufacturers sell goods in the United States at less than fair value. Countervailing occurs when a foreign government provides enough subsidies and tax benefits for its manufacturers to sell goods more cheaply than an importing nation. Antidumping and Countervailing Duty (AD/CVD) laws are often discussed together because both address unfairly traded imports, but they target different causes.

How do imports become subject to countervailing duty (CVD) taxes?

The U.S. federal statute and regulations for Antidumping and Countervailing Duty (AD/CVD) establish standards for identifying unfair subsidization.

Select subsidized imports are subject to countervailing duties, which the International Trade Administration (ITA) defines as a "countervailable subsidy."

Which agencies are responsible for enforcing CVD orders?

U.S. Customs and Border Protection (CBP) partners with other government agencies, known as Partner Government Agencies (PGAs), to enforce antidumping and countervailing duty (AD/CVD) laws on imported goods. CBP is also responsible for collecting these duties in a timely manner.

Who files a countervailing duty petition?

Countervailing investigation requests are filed by a domestic party, such as a manufacturer, trade association or union, within the domestic industry producing a product that competes with the imported product.

The International Trade Commission and U.S. Trade Enforcement and Compliance employ staff who help domestic industries decide if there is sufficient evidence to file a petition for a CVD investigation. Eligible small businesses may also receive support to file a petition.

How do importers know which goods are subject to countervailing duties (CVDs)?

When importing goods into the U.S., businesses can use the Automated Commercial Environment (ACE) to identify whether their shipments will incur tariffs meant to countervail subsidies.

According to the ITA, once a CVD order is in place, Commerce may clarify or amend the scope of that order through specific types of proceedings, including scope rulings, anticircumvention proceedings and changed circumstances reviews.