On Wednesday, the U.S. Department of Commerce began its preliminary phase antidumping and countervailing duty investigations pursuant to the Tariff Act of 1930. The Department of Commerce is looking into whether the imports of stainless steel flanges from China and India, which are alleged to be sold in the U.S. at less than fair value and alleged to be subsidized by the Chinese and Indian governments, are materially injuring the U.S. industry.

The U.S. antidumping law imposes special tariffs to counteract imports that are sold in the U.S. at less than fair value. The U.S. countervailing duty law imposes special tariffs to counteract imports that are sold in the U.S. with the benefit of foreign government subsidies. For these duties to be imposed, the U.S. government must determine that there is material injury, or a threat of material injury, by reason of the dumped and/or subsidized imports.

The probe by the Department of Commerce comes after two privately held companies filed petitions. The two petitioners are the individual members of the Coalition of American Flange Producers: Core Pipe Products, Inc. and Maass Flange Corporation. The petitioners alleged dumping margins in China ranging from 99.23% to 257.11%, and for India margins ranging from 78.49% to 145.25%.

The products covered by these investigations are certain forged stainless steel flanges, whether unfinished, semi-finished or finished. The term “stainless steel” refers to an alloy steel containing, by actual weight, 1.2% or less of carbon and 10.5% or more of chromium, with or without other elements.

It is the job of the Department of Commerce to determine whether the alleged dumping or subsidizing is occurring, and if so, the margin of dumping or the amount of the subsidy. The United States International Trade Commission (“USITC”) will determine whether the U.S. industry is materially injured or threatened with material injury by reason of the imports under investigation. If both the Department of Commerce and the USITC reach affirmative final determinations, then the Department of Commerce will issue an antidumping or a countervailing duty order to offset the subsidy.

The USITC is scheduled to make its preliminary determination regarding the injury on or before October 2, 2017. If the USITC determines that there is injury, the investigations will continue, and the Department of Commerce will makes its preliminary countervailing duty determination in November 2017, and its antidumping determination in January 2018, though these dates may be extended.

The results of the investigation could impact both importers and purchasers. Importers will be liable for any potential duties that are imposed by the U.S. government. Purchases could be impacted because the determination could result in increased prices and/or decreased supply of stainless steel flanges.