What is a countervailing duty and when is it applied?

What is a countervailing duty and when is it applied?

• A. A tariff to offset subsidies provided to exporters; applied following an investigation showing injury and benefit to domestic industry.
• B. A tax on domestic supplies.
• C. A duty applied to imports from undisclosed origins.
• D. A fee for storage in a bonded warehouse.

Answer: (A)

A countervailing duty is an import tariff designed to offset subsidies that a foreign government provides to its exporters. When such subsidies are found to give foreign producers an unfair advantage and harm the domestic industry, the importing country conducts a formal investigation. If the investigation shows that subsidies exist and that they injure or threaten to injure domestic producers, the countervailing duty is imposed on the affected imported goods. This tool is part of trade remedies to level the playing field in international commerce. It’s not a tax on domestic goods, not a measure targeting undisclosed origins, and not a storage or bonded-warehouse fee.

A countervailing duty is an import tariff designed to offset subsidies that a foreign government provides to its exporters. When such subsidies are found to give foreign producers an unfair advantage and harm the domestic industry, the importing country conducts a formal investigation. If the investigation shows that subsidies exist and that they injure or threaten to injure domestic producers, the countervailing duty is imposed on the affected imported goods. This tool is part of trade remedies to level the playing field in international commerce. It’s not a tax on domestic goods, not a measure targeting undisclosed origins, and not a storage or bonded-warehouse fee.