Global Customs: Anti-Dumping & Countervailing Duties [PODCAST]

Written by Expeditors
18 minute read


Stephanie Holloway, Regional Customs Manager for The Americas, gives a crash course on anti-dumping and countervailing duties: how they're alike, how they work, what importers need to do to avoid overpaying, and much more.


Chris Parker: Hello, everyone, and welcome to the Expeditors podcast, where we look at the logistics and freight forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker, and today's topic, anti-dumping and countervailing duties. We'll be discussing the difference between the two, how cases are resolved and acted upon, and how these two forms of duties are being used to protect economies and industries. We'll also learn why it's important now more than ever for you to be aware of them. Returning to talk about this is Regional Customs Manager for the Americas, Stephanie Holloway. Stephanie. Welcome back.

Stephanie Holloway: Thanks, Chris. I'm excited to be here.

Chris Parker: How have you been? Last we talked was about HTS codes. There was a big deadline that was being met. How did all that go?

Stephanie Holloway: It went down in flames. No, it went spectacularly, just as you would imagine. Those got implemented at the end of January. Of course, the common hiccups along the way, but we are happy to be over that hurdle and on for the next supply chain challenge.

Chris Parker: Absolutely. And this is definitely one of them. It sounds like. I heard that you had been doing a series of webinars lately talking about this particular topic. What was the impetus for all that?

Stephanie Holloway: So last year, we took a deep dive, looking at our processes around anti-dumping and countervailing. One of the areas that we saw an opportunity in was to spend more time helping to educate our customers. There are so many new folks coming into our industry, especially with our customer base, that we really wanted to spend time investing and making sure that they were up to speed on this topic.

Chris Parker: All right. Well, let's go ahead and get into it. So we're talking about anti-dumping and countervailing duties. I've heard the two terms being used together, but how are they related to each other?

Stephanie Holloway: Yes. They are both trade remedies that seek to address unfair trade practices. So, that was a good sentence, right?

Chris Parker: Yeah, what do you mean by that?

Stephanie Holloway: Lots of customs lingo in there. So the goal of them is to try to level the playing field. What happens is there can be imports coming into a country, usually at unfair prices. What the country seeks to do is impose additional duties, which in this case are anti-dumping and countervailing duties, to try to level the playing field. That will be a theme that I'll keep coming back to is this concept of leveling the playing field by adding these additional duties on.

Chris Parker: Now, anti-dumping and countervailing, they're still two different things. What's the difference between both of them?

Stephanie Holloway: Yeah, so they're two distinct duty types. They are sometimes used together, but what anti-dumping duties try to do is address when goods are being sold at less than fair market value. Countervailing duties are used when foreign governments are subsidizing goods that are then being imported into a country.

Chris Parker: Okay. So then, simple question here. Let's start. I'm a video person. I am not very much deep into the economics of anything. Why would a country subsidize certain goods or industries?

Stephanie Holloway: Yeah, that feels weird, I think sometimes. But what I usually will do is think about the country that you're in. Most countries, the governments will subsidize some industry.

Chris Parker: Sure.

Stephanie Holloway: In the U.S., we often will subsidize agriculture, and we have for, I don't know if I would say hundreds of years, but ... We haven't been a country that long. But we've done it for a really long time. It's because we feel that it's important to make sure that industry stays, right? And can continue to make food for us. So there's a variety of reasons why a government might subsidize items.

Chris Parker: So with these duties, how do they get applied? What's the decision process? What's the history of these even for anti-dumping and countervailing

Stephanie Holloway: Not a loaded question.

Chris Parker: Tell me everything.

Stephanie Holloway: Oh, boy. Oh, boy. How long is this podcast? Okay, so I'm going to answer this from a US perspective.

Chris Parker: Sure.

Stephanie Holloway: Because that's what I know really well. But this concept of applying anti-dumping and countervailing duties is a global concept. It's just not unique to the US. With that said, let's dive in to see how a case even gets started. A domestic industry will identify, "Hey, we're being threatened. Imports are coming in. They're selling at a less than market value price. We can't compete". At that point, they'll file a petition with the US government, and two different groups will get involved. The first one is a division of the Department of Commerce, which is the International Trade Administration, for short the ITA. Then the second group is the US International Trade Commission or the USITC. Each of these groups have distinct purposes in this. Okay, you still with me?

Chris Parker: Yeah. You just threw two acronyms at me. I'll try to keep them separate.

Stephanie Holloway: I know. This is all we do in customs is acronyms. Really, this whole industry is acronyms. It's just hard to know which ones are Expeditors and which ones are logistics.

Stephanie Holloway: So, we got these two groups. The USITC, they have one job, and their job is to determine whether or not the domestic industry is actually being threatened. Not an easy task. Then, the ITA has two jobs. The first one is to see if the dumping or subsidizing is actually happening. That's a lot of research and digging into data. Then, the second one is, if it is happening, what is that duty to offset? Remember that leveling the playing field? That's where that concept is coming in because now they have to determine what amount of duty needs to be done. So, you're still with me?

Chris Parker: Yes, absolutely.

Stephanie Holloway: We have the two groups. Now, this is where it gets real exciting. It kind of becomes this ping pong match back and forth. They're each making preliminary decisions, and then they make final decisions, and they're doing their research, and they're on very tight timeframes. Because if dumping is happening or subsidizing is happening, and the intent is to protect the industry, we need to get these additional duties in place quickly.

Chris Parker: Right, before more damage is done.

Stephanie Holloway: Exactly. The ping pong match is going back and forth. At any time, if one of the organizations says, "Hey, actually, I don't see that subsidizing is happening", or "I don't see that the domestic industry is being harmed", the case is closed. It just stops right there. But otherwise, it keeps going until we get a resolution. If both parties are saying yes, domestic industry is being hurt; yes, dumping or subsidizing is happening, then they'll issue an order. That's where those additional duties are going to come into play. So, are you ready for a real fun fact, though?

Chris Parker: Let's go.

Stephanie Holloway: A lot of people think it's not until that ping pong match is over that the additional duties are going to start to be collected. They actually start to collect the duties, and by they, I mean customs. We'll start to collect duties about halfway through the process. As soon as both of them give a tentative, "yes, we believe that's happening", they start to collect duties. So that's kind of a unique thing from an importer's perspective, or a broker's perspective is just to be aware of what cases are happening. Because even if it's not fully resolved and sent to order, there are duties that will need to be collected fairly early on.

Chris Parker: Wow. So you need to be ready to account for these duties being asked before any firm answer arrive. Before there's any resolution.

Stephanie Holloway: They're given a tentative. It's called a preliminary decision. But yeah, if both of them are saying preliminarily yes, it's an affirmative, then yes, duties will start to get assessed at that point.

Chris Parker: Yikes, wow.

Stephanie Holloway: And they could be big numbers, Chris. We're not talking 2% duty. We're talking a lot of times, even a 60-100% duty.

Chris Parker: Whoa!

Stephanie Holloway: Yeah, it's wild.

Chris Parker: Wow, no kidding. A word that I heard you using was harm. Harm, when I hear that, I hear malicious intent in some ways. If someone was importing goods with anti-dumping or countervailing duties applied to them, are they the bad guy? Is that bad?

Stephanie Holloway: I think that's a really, it's a good, very loaded question. But what I would say is from a very simple ... I'm just going to put on my very simple hat. No, you're not a bad person, or you're not a bad importer. The whole point of these duties is to level that playing field. It's not so much that it's a penalty. It's just trying to protect and control trade and really protect the US industry or that country's industry.

Stephanie Holloway: Now, I'll put on my slightly more controversial hat and to say, of course, nothing in life is that simple.

Chris Parker: Sure, right.

Stephanie Holloway: Right? You can't just add some additional duties on and say, "I'm done. I walk away from this". The situation is usually more complex than just a simple yes or no. One thing, though, that I would want to point out is, if I was in the importer's shoes and I was looking at, "do I want to import goods that are subject to anti-dumping or countervailing duties?". It's maybe not the moral aspect, like, am I good or bad; but it creates a lot of financial uncertainty.

Stephanie Holloway: First of all, the additional duties can be a lot, but you can account for those as an importer. You're like, "Okay, I get it. Here's my additional cost. I'll add it in and make sure that everything sorts out". But at least in the US, if you have an entry that has additional countervailing or anti-dumping duties, your entry stays open longer. What I mean by that is usually entries liquidate. So that's just the fancy way of, I always say, closing the book on them. Good analogy, right? Of course, just like, "Hey, case closed. We're good", everyone go their own ways. That usually is just under a year. It's like 272 days or something. That's usually when that book closes. But with anti-dumping and countervailing, that book can stay open for three years.

Chris Parker: Wow.

Stephanie Holloway: So you're exposing yourself to a lot more time of potential duties or customs researching things or the case being modified or other things. So I would say that's more of a consideration from the importer side than the moral stance on whether or not you should import.

Chris Parker: Absolutely. It leaves you vulnerable for a much longer time.

Stephanie Holloway: It does, yeah.

Chris Parker: Interesting. So then, given that you've been doing a whole series of webinars around this particular topic, why are we talking about this now? What has been happening around anti-dumping and countervailing that makes it important for people to understand now?

Stephanie Holloway: In the very beginning, I said, it's a trade remedy, which is really a way to help control trade. And this is, I give so many asterisks and disclaimers in this next statement, but it's a relatively easy type of trade remedy for the US government to apply. I'm not saying it's right or wrong. I'm saying in the scheme of everything, it's relatively easy. It's been a tool that's been used much more frequently than what we've seen. And if you look at just a simple chart, and I know the listeners can't see this, but I'm doing that thing with my finger where-

Chris Parker: It's going up, everybody.

Stephanie Holloway: It's going straight up. Straight up. So really, if you look at a chart of the number of cases that are are opened and how many cases are active, it just continues to grow pretty exponentially even though this trade remedy has been around for a really long time and can be used.

Stephanie Holloway: Secondly, customs keeps a list of priority trade issues that they publish in and its things that they are passionate about. Feels a little strong of a word, but essentially their roadmap of what they're looking at and enforcing. Anti-dumping and counter-veiling duties are clearly on that roadmap. That means importers are getting more letters. They're getting more requests. Customs has resources allocated towards that, which just makes everything much more spotlighted for the trade community.

Chris Parker: So then, what should importers be taking into consideration when it comes to these duties? What kind of conversations should they be having either internally or with their customs brokers in order to set themselves up for success?

Stephanie Holloway: I'm going to say the first thing they need to do, which is a very un-fun answer, is make sure their goods are classified correctly. Because classifications are really the basis of so much in the customs world. Customs working with the ITA actually flag potential anti-dumping countervailing cases against HTS numbers. It's not a one-to-one match. It doesn't mean always it will apply, or it will never apply if it's not flagged, but that's a great indicator. So if you have a good classification, then someone like Expeditors can work with you and help you understand, "Hey, which potential cases do I have based on my HTS mix?".

Stephanie Holloway: From there, you need to read the scope. ITA, as one of their jobs, is to publish a scope in terms of which items are subject to anti-dumping duties and which items are not. So I'm going to give a classic anti-dumping case of pencils.

Chris Parker: Sure.

Stephanie Holloway: We all know a pencil. It seems very straightforward. Pencils. But what about colored pencils? What about gigantic gift pencils or something. In the case, it gives the specific length and the width, and it needs to be like this, and those are the pencils that are in scope. So they have to write very detailed notes in terms of which items they're targeting, and that all comes from their investigative research during that infamous ping pong match back and forth.

Chris Parker: Gosh, heaven forbid that novelty pencils are at risk.

Stephanie Holloway: They're not, Chris. Good news, spoiler alert, novelty pencils are not under the anti-dumping order. Buy all the novelty pencils now, before they get added in scope.

Stephanie Holloway: Once you understand the scope, then you can say whether or not your items apply. And then from there, I mean, hopefully, you have some type of parts database or a way to communicate with your customs broker so that they can make sure that's being properly declared to the government. So that's really, importers really need to have a good process in place to make sure that they are properly declaring the duties, the anti-dumping and countervailing duties if applicable, and have a process in place to review their items, to make sure if they're not, even if they don't need the additional duties, that they clearly have a reason why, and that they've gone through that due diligence process.

Chris Parker: So then, the scope from the ITA, how often does it get updated? Is it a yearly thing? What's the period that we're looking at?

Stephanie Holloway: Both the duty amount and the scope are not necessarily set in stone. They get published, they go to order, and then there's a regular cadence where both the ITA and the USITC have to re-review these cases. Right now, they review them every two years.

Chris Parker: All right, back to importers. You said they have to do a lot of the not fun stuff. It sounds like a lot of work of making sure that you're classifying everything correctly. What would you say to the importer that says, "Ah, that's too much work. We'll just pay the duties. Whatever it is, it's okay. It's not worth the work".

Stephanie Holloway: I think that's a really good question. First of all, I'd ask them if they're made of money. No, I would not do that because there are some cases where the percentage is not that high. So it could be a valid argument, and I've definitely heard of that before.

Chris Parker: It really depends on the good.

Stephanie Holloway: It really depends on the item. But what I would say is you're really just opening yourself up for more risk. So it's not usually to your best advantage to declare things that are not necessary. Similar to if you're coming back from a trip, you don't just write down everything you could have bought on the customs form. I could have walked through soil. I could have brought home a banana. Usually, you try to steer clear of those risk areas just because you don't need that in your life.

Stephanie Holloway: The other practical side of that is if you declare anti-dumping and countervailing duties, there's a direct connection to the cost of your bond. When you import, you have to have a bond. The cost is generally in line with how much duty you owe customs. So then, as soon as you say, "Hey, I import anti-dumping countervailing goods", your bond amount now has to increase. So there's an actual cost to your bond amount if you're telling the government that you're importing anti-dumping countervailing goods.

Chris Parker: Not to mention, you've exposed yourself to whether this case is closed or open for a good, what, three to four years you said it was?

Stephanie Holloway: Exactly. It's not good.

Chris Parker: No, you don't want to do them.

Stephanie Holloway: We really just want to do it right the first time.

Chris Parker: Yeah, absolutely.

Stephanie Holloway: Yes, exactly.

Chris Parker: So do the work, people. It's very important. All right, before we close, were there any last thoughts? In the conversations that you've had with folks about anti-dumping, anything else that you want them to walk away with today?

Stephanie Holloway: I would just say, because this is such a hot topic, really make sure that you're engaged and you have things in your life that are helping you stay present and informed. So I'm going to plug our Expeditors Newsflash.

Chris Parker: Sure.

Stephanie Holloway: We do a monthly recap that shows all the anti-dumping and countervailing cases that have moved to a point where we're collecting duties on them. So, just trying to continue to put the word out and making sure that importers know what cases are active and what's out there. Another way is customs, US customs at least publishes what we call CSMS messages. They also are trying to blast out and let people know, "Hey, this case is getting started". But there can be a handful of cases starting every month. It's not a million. And if you're engaged and you're following along with trade associations and things like that are relevant to your business, most of the time, you will hear about them. But making sure that you have that as part of your day-to-day process and that you're paying attention and seeing what's coming is super important.

Chris Parker: Absolutely.

Stephanie Holloway: I would say that's my number one thing. Make sure you have something in your life that is going to tell you when new anti-dumping and countervailing cases are coming out.

Chris Parker: Cool. Well, I will be sure to definitely put those links in the show notes. So folks, if you're interested, you will find those there. But until then, Stephanie, thank you so much for educating me very quickly, honestly too, about anti-dumping and countervailing. This is so fascinating that this stuff happens behind the scenes that, I mean, me, as a regular consumer, doesn't even think about. So it's cool to learn about this. Thank you.

Stephanie Holloway: Yeah, you're welcome. Thanks for having me, Chris.

Chris Parker: Thanks for listening to today's episode. If you've got any questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at Take care, and I'll see you next time.

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Blog was originally posted on June 2, 2022 4 PM

Topics: Countervailing, Anti-dumping, AD/CVD


Written by Expeditors

18 minute read