Countervailing duty (CVD) is the destination country’s protection against subsidised foreign exports. The investigation looks at whether the foreign government has provided actionable subsidies to specific producers or industries, and whether those subsidies are causing material injury to the destination country’s domestic industry. If both are found, CVD duties are imposed.
CVD is parallel to anti-dumping duty, the two often run together on the same product, and the same Chinese producer may face both an AD rate and a CVD rate, stacking on top of MFN and Section 301.
What counts as a countervailable subsidy
US, EU, and Australian CVD investigations into Chinese exports have identified subsidy categories including:
- Preferential lending, state-owned bank loans at below-market interest rates
- Tax exemptions and rebates, corporate income tax holidays, VAT rebates on exports above the standard rate
- Direct grants, provincial or municipal government cash payments to specific industries
- Land use rights, below-market land prices in industrial zones
- Input subsidies, below-market pricing of raw materials supplied by state-owned enterprises (electricity, natural gas, steel, certain chemical feedstocks)
- Export financing, preferential terms from China Export-Import Bank or Sinosure
- Industrial policy programs. Made in China 2025, Strategic Emerging Industries, provincial five-year-plan benefits
Each subsidy is quantified as a percentage of export value and the percentages add to the producer’s CVD rate.
Producer-specific rate structure
CVD rates, like AD rates, are producer-specific:
| Producer category | Typical rate range |
|---|---|
| Investigated cooperating producers | 5% to 25% |
| Investigated non-cooperating producers | 100%+ (using “facts available” with adverse inferences) |
| All-others rate | Weighted average of cooperating producers |
The cash-deposit-and-review structure is identical to AD. Importers pay the cash deposit at entry; the final rate is determined years later through administrative review.
CVD on Chinese chemical imports, examples
Active CVD orders on Chinese chemical and material imports into the US over recent years have included:
- Citric acid and certain citrate salts
- Sodium nitrite
- Glycine
- Melamine
- Certain pigments (carbon black for specific uses, certain phthalocyanine pigments)
- Certain catalysts and refining inputs
- Polyester staple fiber and other polymer-related products
- Activated carbon (specific forms)
Active orders change. Always verify the current scope and rate against the trade authority’s database before booking.
CVD plus AD plus Section 301: the duty stack
A Chinese chemical subject to both AD and CVD plus Section 301 carries:
- Standard MFN rate (e.g. 3.7%)
- Plus Section 301 List 3 rate (25%)
- Plus AD rate (varies by producer, e.g. 30%)
- Plus CVD rate (varies by producer, e.g. 15%)
Total stack: 73.7%. Real numbers for specific chemicals from specific producers.
Managing CVD exposure
Same toolkit as AD:
- Verify the specific factory’s CVD status before booking. A producer with a 5 percent CVD rate is workable; a producer with a 50 percent CVD rate often is not.
- Source from producers not investigated. New producers can enter the market with a separate rate review request, though the rate-review process takes 12 to 18 months.
- Source outside China. For products with severe CVD exposure, the duty stack often makes alternate origins (Korea, India, Vietnam, Mexico) cheaper landed even at higher unit prices.
- Track for changed circumstances reviews. CVD rates can be reduced, terminated, or increased based on changes in subsidy programs. Subscribe to the trade authority’s notifications.
Practical sourcing notes
For US-bound chemical shipments, our pre-quote check is: standard MFN rate, Section 301 status, AD scope and rate, CVD scope and rate. The four together give the buyer the full duty exposure. If the stack pushes the landed cost above what the buyer can pass on, we redirect early, to a different Chinese producer, to a non-Chinese origin, or to an alternative substance. Late discovery of a 70 percent duty stack is the most expensive mistake we see in chemical sourcing.
Related terms
Anti-Dumping Duty is the parallel anti-pricing-below-cost regime. Section 301 is the China-specific List 3 tariff. HS Code determines CVD scope.