Countervailing Duty Tariffs May Increase Under a New Rule Regarding Currency Undervaluation

Countervailing Duty Tariffs May Increase Under a New Rule Regarding Currency Undervaluation

April 2, 2020, Covington Alert

The U.S. Department of Commerce (“Commerce”) recently published a new rule which makes it much more likely that the agency will investigate currency undervaluation as a countervailable subsidy. The new rule applies to countervailing duty (“CVD”) investigations or administrative reviews initiated on or after April 6, 2020. Under this new rule, Commerce could determine a foreign producer received a subsidy when it sold goods in the United States and then exchanged its U.S. dollars for an undervalued currency. While the currency practices of China are expected to be a target under the new rule, the rule could apply to any country with an undervalued currency.