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Duty Types

What is Countervailing Duty?

Additional tariff imposed to offset foreign government subsidies on exported goods, levied after ITC investigation. In the context of U.S. customs and tariff recovery, understanding countervailing duty is essential for navigating the CAPE refund process and ensuring accurate duty assessment.

Definition

A countervailing duty (CVD) is an additional tariff imposed on imported goods to offset the benefit of foreign government subsidies provided to the manufacturer or exporter. When a foreign government subsidizes its domestic producers (through grants, tax breaks, below-market loans, etc.), those producers can sell goods in the U.S. at artificially low prices, harming domestic competitors. The Department of Commerce calculates the subsidy rate, and CBP assesses the CVD accordingly. Like antidumping duties, CVDs are subject to annual administrative reviews and can be retroactively adjusted.

How Countervailing Duty Relates to Tariff Refunds

Countervailing duties are assessed under a separate legal authority from IEEPA and Section 301 tariffs. While goods subject to CVD orders may also carry IEEPA reciprocal duties (HTS 9903.02, making the IEEPA portion CAPE-eligible), the CVD itself is not part of the CAPE program, and any Section 301 surcharge follows its own recovery path (USTR exclusions, Post-Summary Correction, or a section 1514 protest). Importers should ensure their claims correctly distinguish CVD deposits from recoverable tariff overpayments.

Example

The Commerce Department determines that Chinese aluminum extrusions receive government subsidies of 18%. CBP assesses an 18% CVD on top of the base duty, any IEEPA reciprocal duty, and any Section 301 tariff. The CVD cannot be recovered through CAPE, but the IEEPA portion can; the Section 301 portion is recovered separately via exclusions or a protest.

Frequently Asked Questions

Is a countervailing duty the same as an antidumping duty?
No. CVDs offset foreign government subsidies. AD duties offset below-fair-market-value pricing by the manufacturer. The same product can be subject to both.
Can CVDs be refunded through CAPE?
No. CAPE covers IEEPA tariff overpayments only. CVDs have their own administrative review and refund mechanisms, and Section 301 duties follow the USTR exclusion or protest path.

Related Terms

Antidumping DutyAdditional tariff imposed on imports sold below fair market value to protect domestic industry.DutyA tax imposed by the government on imported goods, based on the HTS classification and country of origin.ITCInternational Trade Commission — the independent U.S. agency that investigates trade injury claims and advises on tariff policy.Section 301Trade Act provision authorizing tariffs in response to unfair foreign trade practices, notably applied to Chinese imports.CBPU.S. Customs and Border Protection — the federal agency that regulates imports, collects duties, and enforces trade laws.

Legal References

  • 19 U.S.C. § 1671 — Countervailing Duties
  • 19 CFR Part 351 — CVD Procedures

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