A cheap equipment “clearance rack” system of sorts could be shutting down, and truckers looking for a bargain on van trailers may soon see prices climbing.
Those shopping for trailers may have noticed that some van trailers have been significantly cheaper than others. Many of those trailers are from Mexico, including Hyundai and Utility Trailers, while others came from China.
According to the American Trailer Manufacturers Coalition, foreign subsidies and unfair pricing practices have allowed some imported trailers to be sold at lower prices in the U.S. market. Coalition members include Great Dane, Stoughton and Wabash.
Last year, the U.S. International Trade Commission launched an investigation into van trailers coming from Canada, China and Mexico. The feds were looking into whether those governments helped manufacturers through subsidies and whether those products were being sold in the U.S. below fair value.
In February, the International Trade Commission issued a preliminary report finding enough evidence that U.S. trailer makers may be harmed by Canadian, Chinese and Mexican imports. That gave the Department of Commerce the green light to move forward with countervailing and antidumping duties.
On June 5, the Department of Commerce published its preliminary determination, and it does not bode well for certain van trailers coming from China and Mexico.
Hyundai and Utility Trailers were delivered relatively light blows. The federal investigation found the Mexican government provided subsidies to Hyundai and Utility at rates of roughly 2%. Consequently, a 2% countervailing duty will be collected on those trailers.
Chinese trailers got hit much harder. Van trailers from CIMC Baowell Industries and several other manufacturers will be hit with an 82.37% duty. Trailers from the remaining 19 companies that did not cooperate with investigators will have a nearly 130% duty tacked on.
On top of that, the Commerce Department also slapped an additional 130% antidumping duty on Chinese trailers.
In other words, there may not be much of a price increase for Hyundai and Utility trailers, if at all. There could be an extraordinary price hike for certain Chinese products.
Meanwhile, Canada was taken off the hook for allegations of subsidizing companies. The American Trailer Manufacturers Coalition dropped that petition in May.
The coalition applauded the Commerce Department’s decision.
“When foreign governments prop up exports, U.S. companies and workers pay the price,” Robert E. DeFrancesco, trade counsel to the coalition, said. “The Commerce Department’s decision helps counter these unfair practices in Mexico, where Commerce recently found that the largest producer also received subsidies for a related product, and China, where the primary trailer producer is part of a Chinese state-owned entity.”
More duties could be on the way
The Department of Commerce can increase the countervailing duty and has yet to decide on antidumping duties for Mexico and Canada.
June’s determination is only preliminary. The Commerce Department could decide to raise the duties in its final determination later this year.
Additionally, the determinations for Canada and Mexico examined only countervailable subsidies. A determination related to antidumping measures is expected by July 30.
While the preliminary subsidy rates for Mexican manufacturers were modest, the bigger question is Commerce’s pending antidumping determination. The petition alleged dumping margins exceeding 430% for Mexican trailers, although the final determination could be significantly lower. LL
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