Definition

Noun: A countervailing duty is a specific type of import tax. It is imposed by a country's government on imported goods to counteract (or "countervail") the unfair competitive advantage created by subsidies provided to the producer or exporter by their home government. Its primary purpose is to protect domestic industries from harm caused by these subsidized imports.

Usage

A countervailing duty is a trade remedy measure. It is applied after an investigation finds that a foreign government is providing financial assistance (a subsidy) to its exporters, and that this subsidized import is causing or threatening to cause material injury to the domestic industry of the importing country.

Examples

• The U.S. Department of Commerce imposed a countervailing duty on imported steel after determining the foreign producers received substantial government subsidies.
• To protect its farmers, the country levied a countervailing duty on subsidized agricultural products from abroad.
• The World Trade Organization (WTO) has specific rules governing when a countervailing duty can be legally applied.

Advanced Usage

• "To impose/levy a countervailing duty on [product]": This is the standard phrasing for applying this tax.
  • The commission voted to impose a countervailing duty on solar panels.
• "Countervailing duty investigation/proceedings": Refers to the legal and administrative process to determine if such a duty is warranted.
  • The countervailing duty investigation concluded that the subsidies were actionable.

Variants and Related Words

• Countervail (verb): To act against something with equal force; to offset.
  • The new policy aims to countervail the negative effects of the subsidy.
• Anti-dumping duty (noun): A related but distinct import tax imposed to offset goods sold at an unfairly low price (dumping), rather than to offset subsidies.
• Subsidy (noun): Financial aid or support provided by a government to a domestic industry, which can lead to countervailing duties if it injures another country's industry.

Synonyms

• Offsetting duty
• Countervailing tariff (Note: "duty" and "tariff" are often used interchangeably in this context, though "duty" is more precise here.)

Related Phrases

• "To file for countervailing duties": The act of a domestic industry formally requesting the government to initiate an investigation.
  • The manufacturer's association decided to file for countervailing duties against the imported goods.
• "Countervailing duty order": The official legal document that mandates the collection of the duty.
  • The countervailing duty order was published in the federal register.

Noun

1. a duty imposed to offset subsidies by foreign governments