Countervailing Duty (CVD)

A countervailing duty is an import tax that offsets a foreign government subsidy that gave an overseas producer an unfair price advantage. Commerce measures the subsidy rate (grants, tax breaks, cheap loans, below-market inputs) and sets the CVD to cancel it out; rates are company- and country-specific. CVD is the twin of the antidumping duty and the two are usually paired in the same 'AD/CVD' case and order. Example: Chinese solar panels have carried CVD rates layered alongside antidumping margins, so a single entry can owe MFN duty, Section 301, AD, and CVD all at once. It matters because AD/CVD orders are the single largest source of surprise duty bills for importers, and like antidumping duty, CVD is excluded from duty drawback recovery.