A countervailing duty (CVD) is an import tax imposed by governments to offset the impact and cost effect of subsidies from governments. A countervailing duty serves as an import tax levied by the importing country on imported products.
Countervailing duty is charged in addition to the stated amount in the Harmonized Tariff Schedule (HTS) as well as any additional fees required on each individual import.
What Is Countervailing Duty in Freight Shipping?
Countervailing is a key area of trade facilitation and enforcement in the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA).
Countervailing duty and Anti-dumping
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 their manufacturers to sell their goods more cheaply than an importing nation.
How Do Imports Become Subject to Countervailing Duty (CVD) Taxes?
The U.S. Federal statute and regulations for Antidumping and Countervailing Duty (AV/CVD) establish standards for identifying unfair subsidizations.
Select subsidized imports are subject to countervailing duties which the International Trade Administration (ITA) defines as a “countervailable subsidy.”
How is the CVD amount calculated?
When a foreign producer receives a subsidy from its government, that amount is utilized to determine the cost of the CVD for the imported goods. The amount imposed through the CVD order is calculated using the assessable value of the item, which is typically the same as the transaction value. This duty is charged in addition to the stated amount in the Harmonized Tariff Schedule (HTS) as well as any additional fees required on each individual import.
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. Additionally, CPB is responsible for collecting these duties in a timely manner.
Who Files a Countervailing Duty Petition?
Countervailing investigation requests are requested by a domestic party such as the manufacturer, trade association, or union within the domestic industry producing a product that competes with the imported product.
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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: scope rulings, anticircumvention proceedings, and changed circumstances reviews.”
How MercuryGate Helps Support Global Trade Participants Manage Countervailing
Managing imports is complex, especially in a competitive global economy. And staying relevant in any industry is difficult when companies attempt to circumvent laws, including countervailing duties. As the logistics landscape evolves, customs and compliance regulations change too.
Avoiding unexpected duties and delays requires careful planning, guidance from experts in international trade, and best-in-class technology. With MercuryGate’s Global Trade solution, businesses can utilize tools that:
- Simplify U.S. customs processes and import compliance
- Identify shipments that are subject to countervailing duties (CVDs)
- Help customs brokers supercharge freight shipping efficiency
Watch this webinar to explore strategies and solutions that help importers navigate just-in-time supply chains, upstream product integrity, performance and safety mandates, and the evolving regulatory environment of an ever-changing freight shipping environment.
Leverage innovative technology to manage imports with Global Trade solutions from MercuryGate.
