CIT Rules Section 232 Tariffs May Be Deducted From AD Calculations, Potentially Raising Rates

Importers of steel and aluminum could be facing higher antidumping duty rates, after the Court of International Trade ruled Feb. 17 that Section 232 tariffs are a form of normal import duties that should be deducted from foreign exporters' U.S. prices in AD duty rate calculations. The trade court held that, unlike Section 201 safeguard duties and AD/CV duties, which are not deducted, the national security-based Section 232 tariffs have a different purpose unrelated to remediating injury from an import surge or underpriced imports.

When calculating antidumping duties, Commerce generally compares an exporter's home market prices with the prices of its sales in the U.S., adjusted for many factors to make the prices comparable. Dumping occurs when the exporter is selling in the U.S. at lower prices than in the home market. In general, an increase in an exporter's U.S. export prices causes AD rates to fall, while a decrease in prices causes them to rise; a deduction from the U.S. price, such as for Section 232 tariffs paid on the goods, effectively lowers the U.S. export price and, all else equal, increases the AD duty rate.

Following imposition of the Section 232 tariffs in March 2018, Commerce conducted an administrative review on circular welded carbon steel standard pipe and tube products from Turkey covering entries in 2017-18. On entries covered by Section 232 tariffs, Commerce deducted them from the export prices of the Turkish exporter Borusan Mannesmann Boru Sanayi Ve Ticaret. Borusan, and its U.S. affiliate challenged the deduction, among other aspects of the final results of the review.

Borusan attempted to make the case that Section 232 tariffs are similar to Section 201 tariffs -- “special tariffs” that are not allowed to be deducted from antidumping rate calculations. The court differentiated between the two types of tariffs on the grounds that Section 201 tariffs are inherently similar to antidumping duties and that, unlike for Section 232 tariffs, deducting the Section 201 tariffs in the antidumping rate calculation would constitute a double remedy for import injury.

On the other hand, Section 232 tariffs are put in place for national security reasons, and no consideration of existing AD/CV duties or safeguards is required prior to their imposition. Commerce's decision to deduct the Section 232 tariffs was “a reasonable decision based on crucial differences between Sections 201 and 232, namely that Section 201 duties are more akin to antidumping duties and that there is an interplay between antidumping duties and Section 201 duties, which is not present with Section 232 duties,” CIT said.