The US Department of Commerce (DoC) announced earlier this week that countervailing duty investigations discovered polyester textured yarn from China and India were unfairly subsidized, damaging American producers. In response, the DoC is expected to slap Chinese producers with tariffs of between 32% and 460% and Indian producers of between 7.1% and 20.5%, reported the DoC Office of Public Affairs.

The DoC notified US Customs and Border Protection (CBP) about the issue, has instructed all customs agents to collect only cash deposits from importers of the yarn from China and India based on the preliminary rates below.

The deepening trade war comes as two American yarn producers claim in petitions that China and India have severely crippled their domestic operations by dumping low-cost, subsidized imports of yarn into North American markets.

"This is an important issue with respect to US producers of fiber and textile products," the petitioners' attorney, Paul Rosenthal of Kelley Drye & Warren in Washington, DC, told Law.com 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."

The petitioners are Unifi Manufacturing Inc. in Greensboro, North Carolina, and Nan Ya Plastics Corp. in Lake City, South Carolina, have demanded that DoC impose antidumping and countervailing tariffs on foreign subsidized yarn. The DOC said a preliminary determination on the antidumping duties would be announced shortly.

The final decision on duties by the DoC will be made in the next three to five months. In the meantime, Chinese and Indian yarn producers are subjected to increased countervailing duty payments of 20% to 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."

During the countervailing duty investigation, the DoC determined that yarn producers in China and India were receiving massive government subsidies, which then in return, were able to export the yarn into US markets and undercut domestic producers.

As of 2017, CBP estimates show yarn volume from China and India was approximately 69 million pounds, a massive 81.5% increase since 2013.

"The result has been that US 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.

President Trump has so far initiated 158 new antidumping and countervailing duty investigations—a 216% increase over the same period when Barack Obama was president.

If the DoC announces a final affirmative determination on September 10, 2019, then the final decision to enact full blown yarn tariffs will be made by the US International Trade Commission (ITC) by October 24, 2019.

A trade deal between the US and China could be around the corner. While there's a strong likelihood both countries will hammer out an agreement at some point, the most significant obstacle that could derail positive talks today is the prospect of more US tariffs.

President Trump is a "tariff man," the more than $200 billion of tariffs he slapped on China is likely sticking around for quite some time. Tariffs are big business for the government, so far they've collected $50 to $60 billion from American importers. So maybe a trade deal by next Friday is just smoke and mirrors, after all, it seems that more tariffs are about to come online, something that will make the Chinese more furious.