China Shipping Commodities at Below Cost Attracts Extra Duties for American Importers

The practice of dumping cheap products on the US market has brought Chinese imports into the spotlight in recent years. The US government has been aware of these dumping practices and associated duty subsidization since at least 2008 and has been moving slowly towards a solution. The strict antidumping duties which have been set by the US Department of Commerce were put in place to curtail the import of goods at below cost, particularly those that have been flagged by the Department as coming from Chinese government subsidized factories. The first of these cases will go before the US International Trade Commission when it next meets in September. The action was set in motion over a year ago by The Coalition for Fair Trade of Hardwood Plywood and they have been pivotal in ensuring that the countervailing duties that are being imposed on Chinese plywood products are being collected. This requires US importers to make a cash deposit on these goods when they import them from China to ensure that any adverse impacts that are determined by the Trade Commission will be fully funded. Presently duties on such imports from China attract cash deposits of between 22% and 67% and these are payable in full by the importers. Similar restrictions are also being imposed on a wider variety of products from China, ranging from diamond saw blades through to lightweight thermal paper. These substantial cash deposits have added a significant upfront expense to the targeted products that is more than the normal duty. In consequence there have been attempts to find ways to circumvent the cash deposits. For importers that are reimbursed by their Chinese suppliers there have been penalties imposed that as much as doubles their deposit amounts. The most recent indications are that the Chinese exporters are trying to get around the new duties by incorrectly stating the country of origin of the goods. Shipping companies have been warned to be on the lookout as they will incur liability for the charges if they are found to be complicit in the activity. Furthermore, these deposits are not the same as the duty that may be charged which may be far higher. The current plan is to charge duties retroactively and if they exceed the amount deposited then a bill for the difference will be issued to the importer. Under these circumstances it makes investing in Chinese imports an uncertain prospect at best.