Trade Remedies

Countervailing Duty

Also known as: CVD · Countervailing · CVDs

A duty imposed to offset government subsidies provided to foreign producers, when those subsidized imports cause or threaten material injury to a domestic industry.

A Countervailing Duty (CVD) is a remedial duty imposed to offset the benefit of a "countervailable subsidy" provided by a foreign government to producers of goods exported to the United States. The statutory authority is Title VII of the Tariff Act of 1930 (19 U.S.C. §§ 1671–1677), implementing the WTO Agreement on Subsidies and Countervailing Measures, and the procedures are codified at 19 CFR Part 351.

A subsidy is countervailable if it is:

  1. Specific — Provided to a particular enterprise, industry, or group
  2. A financial contribution from a government — Direct payments, loans on preferential terms, tax breaks, provision of goods or services below market, etc.
  3. Conferring a benefit — Putting the recipient in a better position than it would be in absent the subsidy

Like antidumping cases, CVD proceedings involve parallel Commerce Department and USITC investigations. Commerce calculates the net subsidy rate; USITC determines material injury. Both affirmative findings are required.

CVD rates are expressed as a percentage of the customs value and stack with antidumping duties, Section 301, Section 232, and the underlying ad valorem rate.

Cases against China have produced the largest CVD rates in the system — sometimes exceeding 500% when combined with AD — particularly for solar cells, steel products, aluminum extrusions, and tires. CVD orders remain in force until revoked, with sunset reviews every five years.

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Related Terms

Antidumping Duty

A duty imposed on imported goods sold in the United States at less than fair value, when those imports cause or threaten material injury to a domestic industry.

U.S. Department of Commerce

The cabinet-level department whose International Trade Administration runs antidumping and countervailing duty investigations and Section 232 cases.

U.S. International Trade Commission

The independent federal agency that publishes the HTS, investigates trade injury, and provides Congress with trade analysis.

Material Injury

Harm to a U.S. industry that is not inconsequential, immaterial, or unimportant — the injury standard the USITC must find before AD or CVD duties can be imposed.

Countervailing Duty Investigation

A formal Commerce Department and USITC investigation to determine whether foreign subsidies and resulting imports cause material injury to a U.S. industry.

Sunset Review

A mandatory five-year review by Commerce and the USITC to determine whether revoking an existing AD or CVD order would likely lead to a recurrence of dumping, subsidization, or injury.
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