When a business imports goods into the U.S., they need to find out if those goods are subject to anti dumping duties to ensure they pay the correct duties to U.S. Customs and Border Protection (CBP). The International Trade Administration (ITA) levies these additional duties on items that are sold in the U.S. at a lower price than in the producer’s country of origin.

What Are Anti Dumping Duty Rates?

According to information from Title 19, Part 351 of the Code of Federal Regulations, antidumping duty rates are additional duty rates applied to covered merchandise under an AD order or investigation when those goods are suspected of being sold at less than fair value. 

Dumping is a term used in the trade industry to identify the practice of flooding a market with a cheaper, foreign-manufactured version of a local product. The ITA puts anti dumping and countervailing duty rates in place to level the playing field when foreign businesses attempt to undercut domestic producers in the U.S.

When Does CBP Collect Anti Dumping Duties?

CBP collects cash deposits or assesses AD duties when Commerce instructs CBP to do so.

Let’s look at an anti dumping scenario that involves a sheet metal manufacturer. Company A sells sheet metal in the U.S. Company B is a new company that just started importing and is distributing their sheet metal at a lower price than the U.S.-made or other imported product price. 

Company A’s profit goes back into salaries, production, and profit. Comparable products from other foreign companies might sell for a few dollars less or more but fall within acceptable margins. 

Company B, however, has found a way to drastically slice its production costs, allowing it to sell sheet metal at a significantly lower price. 

When Company B started selling its sheet metal for $20 less per unit than market value, Company A suffered a loss to its competitive ability. In the worst-case scenario, this could cause Company A to go out of business.

Other foreign importers, also unable to compete with the lower prices, stop importing to the U.S. to seek more profitable markets. Company B is now the main distributor for sheet metal and can raise prices with little to no competition. This causes suppliers in the U.S. to petition the DOC for relief. 

The department conducts an investigation. If the following criteria are met, no dumping duty is assessed:

• A dumping margin of less than 2% of the export price (still a fair competitive price)
• An import volume of less than 3% when it’s one product from one nation
• An import volume of less than 7% when it’s one product from multiple nations

Depending on the outcome of a joint DOC and ITC investigation and the other nation’s response, an official notice is issued and CBP starts collecting the anti dumping duty at the time of import. 

How Are Anti Dumping Duty Rates Determined?

The ITA has three different ways of calculating what a product’s ‘normal’ value should be when compared to domestic prices: 

1. Examining the product cost in the exporter’s domestic market to see if it’s higher
2. Examining the differences in the prices charged by the exporter in other nations
3. Examining the production costs, additional expenses, and resulting profit margins

Dumping is usually confirmed if these examinations show that the importing country is paying less for the product than what is being charged to the exporting nation’s buyers.

While an investigation is being conducted, the ITA, sets the initial deposit amounts and will calculate the final rates if needed.  

Initial deposits can range anywhere from 0% to 1731.75% of the export price. Final rates vary widely by AD order, exporter, producer, and review results.

The higher the AD rate, the more impact dumping could have on the U.S. economy. 

Where Can Importers Find Anti Dumping Duty Rates?

The easiest way for an importer to find anti dumping duty rates is to use CBP’s ADCVD search tool. Importers can use the tool to make simple or complex queries about whether anti dumping duty rates may pertain to their choice of imported commodities. 

The tool’s searchable data points include message type, sub type, case numbers, producer/exporter names, and coverage/effective dates.

What Can Cause an Anti Dumping Duty Rate to Change?

An AD rate can change from investigation to final decision. During an anti dumping investigation, CBP will collect an AD deposit whenever the product is imported. The deposits are in place from the time the DOC and ITC begin their official investigations. 

If the new AD fee is lower, the importer can:

1. File a request with the DOC for a review of their imports within the month the order is finalized
2. The DOC will then pass the case on to CBP for final duty assessment
3. If CBP’s assessment finds you paid more than the necessary duty, they may issue you a refund of the difference

If the new AD fee is higher:

1. CBP will receive instructions on the final AD rate for assessment and collection
2. Importers will receive a bill equal to the amount of the increase plus interest for all goods imported during the AD investigation
3. Goods imported before the investigation and before any deposits were collected would not be included

The second way that AD rates can change is at the time of review. Again per WTO guidelines, an anti-dumping duty can expire after five years. This is known as the Sunset Clause. Before officially expiring, the U.S. conducts another investigation to see if dumping is still necessary. The order remains in place until it is revoked.

The end result could be:

• Complete suspension of all AD duties, effective after the conclusion of the review investigation
• Continued application of the same AD duty rate for another five years
• Adjustment of the AD duty rate, higher or lower, according to review findings

There is a chance that an AD duty is reviewed before the Sunset Clause expiration date. This might happen if both importers and foreign nations feel that an AD duty is being unfairly imposed.

Who Pays Anti Dumping Duties?

The importer of record is responsible for payment to CBP when AD duties are due. 

What to Do Before Purchasing Goods Subject to Anti Dumping Duties

When an importer makes a purchase subject to anti dumping duties, they should follow these steps to ensure their customs clearance process goes as smoothly as possible:

• Confirm the supplier’s identity to ensure that they’re a business in good standing with U.S. customs and aren’t under any further sanctions.
• Verify the duty rate for an accurate estimation of what duties will be owed once the goods arrive in the U.S.
• Estimate total landed cost including ADs, standard duties, shipping costs, cargo insurance, and port fees.

Importers who partner with Licensed Customs Brokers take an extra level of care to avoid inaccurate duty calculations, positioning them for a successful relationship with CBP. If you have questions about anti dumping duty rates or any other topics related to U.S. customs, call us at (855) 912-0406 or contact us online today.

Sources

Title 19, Part 351 - Antidumping and Countervailing Duties, Code of Federal Regulations

ACE AD-CVD application, U.S. Customs and Border Protection