Duties on products from China

On January 15, 2020, the Coalition of American Vertical Engine Producers (Petitioner), consisting of Kohler Co. and Briggs & Stratton Corp., filed antidumping (AD) and countervailing duty (CVD) petitions against Vertical Shaft Engines between 225 – 999 cc from China.  These engines are typically used for riding lawn mowers and other non-hand held outdoor power equipment.

This filing against Chinese vertical engine producers is yet another in a long line of anti-dumping/countervailing duty cases brought to increase the duties on Chinese products entering the United States. With growing anti-China sentiment in the United States, now is a great time to bring such actions and if you import products into the U.S. from China, you need to assess and know the trade risks of your imports. See Has Sourcing Product From China Become TOO Risky? 

President Trump and his administration are seeking to get companies to move manufacturing from China to the United States or at least to countries more friendly to the United States. For information on moving your manufacturing from China, see How NOT to Lose Your Shirt When Having Your Product Made Overseas.

Under U.S. trade laws, a domestic industry can petition the U.S. Department of Commerce (“DOC”) and U.S. International Trade Commission (“ITC”) to investigate whether the named subject imports are being sold to the United States at less than fair value (“dumping”) or benefit from unfair government subsidies.  For AD/CVD duties to be imposed, the U.S. government must determine not only that dumping or subsidization is occurring, but also that the subject imports are causing “material injury” or “threat of material injury” to the domestic industry.

This petition noted that these engines were subject to the Section 301 25% tariff applied on Chinese imports, but that USTR granted exclusions to certain types of engines covered by this investigation, which caused a surge of Chinese imports since August 2019. Many of the U.S. importers of these engines are U.S. lawn mower producers (e.g., Honda, Husqvarna, MTD, Toro).

Scope

The petition identifies the scope of the merchandise to be covered by this AD/CVD investigation as “spark-ignited, non-road, vertical shaft engines, whether finished or unfinished, whether assembled or unassembled, designed primarily for use in riding lawn mowers and zero-turn radius lawn mowers. Engines meeting this physical description may also be designed for use in other non-hand-held outdoor power equipment. The subject engines are spark ignition, single or multiple cylinder, air cooled, internal combustion engines with vertical power take off shafts with a minimum displacement of 225 cubic centimeters (“cc”) and a maximum displacement of 999cc. Typically, engines with displacements of this size generate gross power of between 6.7 kilowatts (“kw”) to 42 kw.”

See the proposed scope definition for a complete description of the physical characteristics of the covered merchandise, and the HTS numbers that may be used to import the subject merchandise.

Alleged AD/ CVD Margins on Vertical Engines from China.

Petitioner calculated estimated dumping margins ranging between 320.41% and 633.64% for China.

Although Petitioner alleged numerous government subsidy programs that benefitted the Chinese wood moulding and millwork products industries, Petitioner did not allege a specific subsidy rates.

Named Chinese Exporters/ Producers

Petitioner included a list of companies it believes are producers and exporters of the subject merchandise.  See the attached list here.

Named U.S. Importers of Vertical Engines from China

Petitioner included a list of companies it believes are U.S. importers of vertical engines from China.  See that attached list here.

Estimated Schedule of Investigations.

January 15, 2020 – Petitions filed

February 4, 2020 – DOC initiates investigation

February 5, 2020 – ITC Staff Conference

March 2, 2020 – ITC preliminary determination

June 13, 2020 – DOC CVD preliminary determination (assuming extended deadline) (4/9/20 – unextended)

August 12, 2020 – DOC AD preliminary determination (assuming extended deadline) (6/23/20 – unextended)

December 25, 2020 – DOC final determination (extended and AD/CVD aligned)

February 8, 2021 – ITC final determination (extended)

February 15, 2021 – DOC AD/CVD orders issued (extended)