Stiff Duties Expected on Driveline Components from China and Canada

The Department of Commerce and International Trade Commission suspect driveline components exported from China and Canada to the US are sold at prices below fair market value or are being subsidized by a foreign "authority". However, a new anti-dumping or countervailing duty rule could change that. Preliminary findings of investigations by the Department of Commerce into subsidies and dumping allegations indicate that duties could soon be imposed on iron castings from these two countries.

"Dumping occurs" when a foreign company sells a product in the United States at less than its fair value. The anti-dumping law provides US businesses and workers with an internationally-accepted mechanism to seek relief from the market distortion caused by such imports. If final investigations by the Department of Commerce and U.S. International Trade Commission (ITC) determine the allegations on the Chinese and Canadian driveline components to be true, an anti-dumping rule with strict duties is likely to come into effect in the near future.

Preliminary Affirmative Determination and Alignment of Final Determination with Final Antidumping Duty Determination

Stiff Duties Expected on Driveline Components from China and Canada

On April 11, 2016, the Department of Commerce International Trade Administration (ITC) published preliminary determinations that countervailable subsidies are being provided to producers and exporter of Driveline Components from the People's Republic of China. The preliminary determination is currently in its comment period. The notice sets forth Countervailing duties on driveline components from several manufactures in the People's Republic of China ranging from 2.68% to 166.77% and a duty of 15.51% on all producers not specifically named in the notice. The ITC also announced their intention of aligning the Countervailing Duties Final Determination with the Final determination of the companion Anti-dumping investigation. The final Countervailing duty determination will be announced with the final anti-dumping determination, currently scheduled for December 2016.

Driveline Components Likely to be Affected by Anti-Dumping Duty

On June 1, 2016, the Department of Commerce announced its affirmative preliminary determinations in the anti-dumping duty investigations of imports of certain iron mechanical transfer drive components from Canada and the People's Republic of China (PRC). Several categories of driveline components made of grey or ductile iron were investigated, including:

Wheels or cylinders often referred to as sheaves, pulleys, flywheels, flat pulleys, idlers, conveyer pulleys, synchronous sheaves, and timing pulleys
Components in the form of a cylinder (also known as bushings) which fit into the bore holes of other mechanical transfer drive components to lock them into drive shafts by means of elements such as teeth, bolts, or screws.
Unfinished drive components (i.e., blanks or castings) which possess the approximate shape of the finished iron mechanical transfer drive component and have not yet been machined to final specification after the initial casting, forging or like operations. These machining processes may include cutting, punching, notching, boring, threading, mitering, or chamfering.
Drive components that have been finished or machined in a third country

Read the ITC fact sheet and summary of the investigations for details.

The Department of Commerce is scheduled to announce its final determinations on or about October 21, 2016 while ITC will make its final determinations in December 2016. Affirmation decisions by both will lead to anti-dumping orders being issued.

If your manufacturing business relies on finished or unfinished iron mechanical transfer drive components from China and Canada, it might be worth your while to explore a US based foundry as an alternative. Being proactive may prevent any unnecessary operational delays or unexpected costs that occur if the tariffs are imposed.

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