U.S. Department of Commerce, Washington, D.C. (Photo: Diego M. Radzinschi/ALM) U.S. Department of Commerce, Washington, D.C. (Photo: Diego M. Radzinschi/ALM)

In another example of the Trump administration's aggressive enforcement of U.S. trade law, the Department of Commerce is poised to begin collecting countervailing and antidumping duties on polyester-textured yarn imported from China and India.

The move comes after two major U.S.-based synthetic yarn producers alleged in petitions that China and India were harming the domestic industry by dumping cheap, subsidized imports of yarn on the U.S. market. In 2017, those imports from China and India totaled $35 million and $19.6 million, respectively, according to the Commerce Department.

“This is an important issue with respect to U.S. producers of fiber and textile products,” the petitioners' attorney, Paul Rosenthal of Kelley Drye & Warren in Washington, D.C., said in an interview Thursday. “We're happy that our allegations concerning subsidies by the Chinese and Indian governments have been found to be accurate and has resulted in some preliminary duties.”

His clients—Unifi Manufacturing Inc. in Greensboro, North Carolina, and Nan Ya Plastics Corp. America in Lake City, South Carolina—have asked the Commerce Department to impose antidumping and countervailing duties on the yarn in question. The agency on Monday announced affirmative preliminary determinations on the countervailing duties for foreign government subsidies and is expected to issue a preliminary determination on the antidumping duties in the near future. 

The Commerce Department is slated to make a final determination on the duties later this year. In the meantime, U.S. companies that continue to import the yarn from China and India risk being hit with increased countervailing duty payments. At the moment, the Commerce Department has instructed the U.S. Customs and Border Protection to begin collecting cash deposits from U.S. importers of yarn from China and India based on preliminary subsidy rates that range from 20% to nearly 460%.   

“These are provisional duties,” Rosenthal noted. “As this gets implemented, importers are being told the entries of their imports are not going to be liquidated. That means they will not be sent a final bill for these imports after publication in the federal register because [the government] is going to wait to see what final level of antidumping duties will be calculated. After that's done it sends a bill for the duties you have to pay.”

The American Apparel & Footwear Association, which represents more than 1,000 retailers and manufacturers in the industry, did not immediately respond to a request for comment on the yarn duties.

As part of its preliminary decision on the countervailing duties, the Commerce Department found that yarn producers and exporters in China and India were receiving significant government subsidies and inundating the U.S. market with underpriced yarn.

The volume of yarn coming into the U.S. from China and India has surged in recent years, growing from about 38 million pounds in 2013 to nearly 69 million pounds in 2017, according to the petition from Unifi and Nan Ya.

“The result has been that U.S. producers of the product have lost sales, and they've lost revenues because they haven't been able to meet the prices offered by China and India,” Rosenthal said.

Under Donald Trump's presidency, the Commerce Department has initiated 158 new antidumping and countervailing duty investigations—a 216% increase compared to the same period when Barack Obama was president. The Commerce Department also announced this week it has launched countervailing and antidumping duty investigations of ceramic tile imports from China.

“There have been more cases filed during the Trump administration, but it's not a Trump administration initiative,” Rosenthal said. “More cases are being filed, because I think people are encouraged that there will be strong enforcement.”

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