As the Trump administration comes into its third month, we have clues, but must speculate on how that administration will modify Iran sanctions, NAFTA, foreign investment, and tariffs on China. In contrast, recently issued executive orders shed clear light on the Trump administration’s approach to antidumping and countervailing duties (AD/CVD). (See our August 2016 blog for a general background on AD/CVD.)
Our analysis shows a clear and present need to prepare for heightened AD/CVD enforcement. That need is signaled by the upward trend in AD/CVD cases that preceded the current Administration, and has been confirmed Wilbur Ross’ confirmation as Secretary of Commerce.
Recently Issued Executive Orders
On March 31, 2017, the Trump administration issued two Executive Orders seeking to address the United States’ trade deficit. Both orders address AD/CVD. The Presidential Executive Order Regarding the Omnibus Report on Significant Trade Deficits mandates that the Commerce Department and the United States Trade Representative (USTR) conduct a broad review of sources of the deficit. That Order also calls for an assessment of injurious dumping.
The Presidential Executive Order on Establishing Enhanced Collection and Enforcement of Antidumping and Countervailing Duties and Violations of Trade and Customs Laws, as the name indicates, targets AD/CVD. Specifically, that Order calls for U.S. Customs and Border Protection (CBP) to develop a plan to remedy the nonpayment of AD/CVD duties. The Order estimates uncollected AD/CVD duties for 2015 reach $2.3 billion.
Increase in AD/CVD Cases Preceding the Trump Administration
As noted above, AD/CVD cases had already increased under the Obama Administration. That increase is likely explained by the recovery of the U.S. economy and the signing of the Trade Preferences Extension Act of 2015. That Act significantly lowered threshold requirements for U.S. industries to bring AD/CVD cases against foreign competitors.
Secretary of Commerce Wilbur Ross
In addition to noting the increase in AD/CVD cases preceding the Trump administration, we see abundant clues that Wilbur Ross, as Secretary of Commerce, will increase AD/CVD enforcement. First, Secretary Ross has signaled the Trump administration will increase antidumping duties on imports of Chinese steel. Second, Secretary Ross has stated that he plans to use the Department of Commerce’s authority to self-initiate AD/CVD cases. For context, almost all AD/CVD cases since the early 1990s have only been instituted after the relevant U.S. industry files a petition.
Does The Expansion Of AD/CVD Enforcement Affect Your Company?
Expanded AD/CVD enforcement can have widespread and varied effects depending on your company’s position in the market, including the following:
- U.S. industries suffering from unfair trade competition may find it easier to file AD/CVD petitions, and the likelihood of success may increase;
- U.S. importers may come under increased scrutiny as to whether imported merchandise is subject to AD/CVD orders and may be required to assiduously ensure that all supplier documentation is in order; and
- Non-U.S. manufacturers and producers exporting products to the United States may find that new products fall within the purview of an AD/CVD investigation and that products already under AD/CVD orders are more strictly examined.
Those changes listed above are coming, and businesses that prepare for the AD/CVD market shifts will be best positioned to succeed in the new environment. For those reasons, we encourage companies to examine how increased AD/CVD enforcement will affect their supply chains and business models. We will continue to closely watch and provide updates on key developments in this area.