International shipping is a lot more complicated than most people realize. International shipping doesn’t just give businesses the opportunity to sell products overseas and expand their company globally; it directly impacts domestic trade, production, manufacturing, and the supply and demand of so many locally produced products.
As a result, while international shipping provides excellent opportunities for growth for individual companies, it also creates the potential for great risk and threats to a country’s economic standing – both locally and globally. That’s why the government often gets involved by instating “Trade Remedies”.
Different Types of Trade Remedies
Trade Remedies are sanctions imposed by the government to counteract unfair trade practices that may directly or inadvertently harm industries in a country’s market. There are several different types of trade remedies that may affect product availability or your cargo pricing during international shipments.
Here are a few different types of trade remedies that you may encounter:
As the name implies, “dumping” refers to selling a product in an international market at an unfairly low price in comparison to what most companies are charging in that market. Dumping is incredibly dangerous for the economy, because it allows the strength of an industry in one country to completely override the demand for the importing country’s local products.
Trade Remedies such as anti-dumping duties are instituted to combat these issues. Whether there will be an anti-dumping duty and how much it will cost will depend on the country of origin and type of product. They can be anywhere between 0% to 550%.
While anti-dumping duties are applied to any products that have flooded into the U.S. market and are being sold at lower prices than what would be charged in the exporting country’s home market, countervailing duties are a bit different.
Countervailing duties, or CVDs, are applied to international goods that can be imported to the U.S. very cheaply. This is usually because the U.S. government or other agency coordinates with the overseas manufacturer to give them a subsidy. Effectively, it’s the opposite of an anti-dumping duty.
Why would you do that? Well, if the market or industry these products are in would harm the U.S. market, it wouldn’t be a smart move. However, for the sake of importing products that don’t threaten current areas of U.S. production and manufacturing, it can be incredibly beneficial to consumers here and manufacturers overseas, making it a win-win for both countries.
The result is that affordable goods flood the U.S. market without competing with local U.S. businesses.
Safeguards are a bit more extreme than either of the prior two examples. Changing pricing structures through increasing or decreasing the cost of importing a product certainly has an effect on the economy and it’s domestic production/manufacturing. However, in cases where the importation of a product whatsoever may impose threats to the U.S. economy, the government may institute “Safeguards”.
Safeguards in international shipping refer to when the government temporarily prohibits the importation of a product in the circumstances that it may do great harm to the import market of the U.S.
If any of this is still unclear to you, or you are being affected by any trade remedies and need answers as to how you can further optimize your internationals shipping practices, please don’t hesitate to call one of our team members! We are incredibly experienced in international shipping and would love the opportunity to answer any and all of your questions if it’s of any help to you!