Countervailing Duties

823

Countervailing duties (CVDs) are special tariffs imposed by a government on imported goods that benefit from subsidies provided by the exporting country’s government. These duties are designed to offset the unfair competitive advantage that subsidized foreign producers may gain in international markets. When domestic industries allege harm from subsidized imports, trade authorities may conduct investigations to determine whether subsidies exist and whether they cause material injury. If confirmed, countervailing duties are applied in addition to regular import tariffs. The amount of duty typically reflects the estimated value of the subsidy. Countervailing duties aim to create a level playing field and protect domestic manufacturers from unfair trade practices. They are regulated under international trade agreements administered by the World Trade Organization (WTO). Importers must pay these duties upon entry of goods, which can significantly affect pricing, sourcing decisions, and global supply chain strategies.