GEARING UP FOR AN “AMERICA FIRST” TRADE POLICY: A REFRESHER ON U.S. ANTI-DUMPING LAWS

On January 20, 2025, President Trump issued a memorandum titled “America First Trade Policy,” outlining three immediate objectives:

1. Addressing unfair and unbalanced trade.

2. Strengthening economic and trade relations with the People’s Republic of China (PRC).

3. Implementing additional economic-security measures.

To achieve these goals, federal agencies and the Office of the United States Trade Representative (USTR) are set to examine key aspects of U.S. trade policy and report findings to the President by April 2025, likely proposing measures such as tariffs and duties. Central to this “fair trade” agenda is the concept of “dumping,” in which a foreign firm sells goods in the U.S. at prices below what is considered their “fair market value.” Policymakers regard dumping as an unfair practice because it can undercut domestic producers, reduce employment opportunities, and ultimately inflate prices for American consumers when competition is weakened.

To counter dumping, the U.S. government imposes anti-dumping duties, increasing costs for foreign exporters and offsetting the price advantage of below-market imports. Given the administration’s stated goal of protecting domestic industries, it is essential to understand both anti-dumping laws and the practical steps involved in their enforcement. Below, this article explains how anti-dumping investigations unfold, discusses what businesses should expect in the current trade climate, and presents a case study of a PRC-controlled company illustrating how these policies affect real-world operations.

1. INSIDE U.S. ANTI-DUMPING INVESTIGATIONS

1.1 A QUICK SNAPSHOT OF THE INVESTIGATION PROCESS

Anti-dumping duties are policy tools that help protect U.S. industries from foreign competitors selling goods at unfairly low prices. Under U.S. law, a domestic industry can petition the government to investigate foreign imports and impose duties if two conditions are met:

1. The imports are (or likely to be) sold in the United States at prices below their fair value.

2. The domestic industry is either already harmed or likely to be harmed by these underpriced imports.

To demonstrate material injury, U.S. manufacturers typically present evidence of declining sales, market share, price depression or suppression, and other negative effects (e.g., reduced profits, workforce cuts). An anti-dumping investigation begins when a U.S. manufacturer submits a complaint to the Department of Commerce (DOC). Once an investigation begins, the DOC collects cost and sales data—primarily through questionnaires sent to foreign firms—to calculate a potential dumping margin and determine whether the goods are indeed sold below fair value.

Meanwhile, the International Trade Commission (ITC) evaluates whether these imports cause or threaten to cause material injury to a U.S. industry. The threshold for material injury requires harm more than minor or immaterial. If either the DOC or the ITC makes a negative finding at an early stage, the process ends. Otherwise, it continues toward final determinations.

1.2 KEY STAGES AND TIMELINES: HOW INVESTIGATIONS UNFOLD

A standard anti-dumping investigation usually lasts about a year. The process generally involves three key stages:

1. Initiation

   • A complaint from a party representing the domestic industry prompts the DOC and the ITC to announce the product under investigation.

   • The party filing the petition must account for at least 25% of the product’s total U.S. production, with more than 50% of those producers supporting the investigation. This requirement ensures the complaint reflects the broader industry’s position.

   • Early announcements identify the general product scope but may not initially disclose the specific foreign exporters.

2. Preliminary Decision

   • The DOC and ITC issue preliminary determinations on whether dumping is occurring and whether it harms the domestic industry.

   • An affirmative preliminary determination requires foreign importers to post a bond or cash deposit for the expected duties.

   • A negative determination ends the investigation

3. Final Determination

   • The DOC makes a final ruling on whether dumping took place and, if found, calculates a specific duty rate.

   • The ITC confirms whether the domestic industry is materially injured or threatened with injury.

   • If both agencies find dumping and injury, respectively, U.S. Customs impose anti-dumping duties on goods from named foreign firms or, in some instances, on all exporting firms producing the product.

1.3 DUTY CALCULATIONS: HOW THE NUMBERS ADD UP

An anti-dumping duty is calculated by identifying the “dumping margin,” which is the difference between a product’s normal value (generally its home-market price or, if that is unavailable, a cost-based estimate) and its export price (often known as the “constructed export price” after various selling and delivery costs). The greater this difference, the higher the duty rate.

A point of contention in this calculation is “zeroing.” This practice involves setting negative margins to zero instead of allowing them to offset positive margins, potentially inflating overall dumping rates. Despite challenges at the World Trade Organization (WTO), the zeroing method continues in certain U.S. anti-dumping investigations.

1.4 SPECIAL CHALLENGES FOR EXPORTERS IN NON-MARKET ECONOMIES (NMEs)

In a Non-Market Economy (NME), cost or pricing structures are not determined by typical market forces. Because the PRC is classified as an NME, understanding the NME methodology is crucial under the current “America First” approach.

Key Differences in NME Methodology

1. Factors of Production: Instead of using home-market prices, the DOC identifies each production factor (e.g., labor hours) and applies surrogate values from a comparable market-economy country. It then adds overhead and profit to arrive at a “normal value.”

2. Higher Calculated Rates: Reliance on surrogate values can significantly inflate the normal value, leading to higher anti-dumping duty rates. For example, in one investigation concerning apple juice concentrate, the DOC’s choice of surrogate country greatly impacted final margins.

3. Single Duty Rate Presumption: The DOC typically assigns one dumping margin to all producers/exporters in an NME. A firm can avoid the country-wide (often higher) rate only if it demonstrates both de jure and de facto independence from state control, placing the burden of proof on the exporter.

Due to the cost and complexity of U.S. legal processes, some NME respondents hesitate to participate fully. Domestic producers often support investigations by lobbying the ITC and DOC, arguing that large volumes of low-priced NME imports harm U.S. operations. A single, higher anti-dumping rate typically applies to all importers from the NME unless they can show independent control. The following case study illustrates the high hurdle NME-based exporters must overcome to demonstrate independence—and thereby secure a separate rate.

2. THE PIRELLI TYRE CASE: A CLOSER LOOK

During the administrative review period from August 1, 2017, to July 31, 2018, Pirelli Tyre Co., Ltd. sought a separate anti-dumping duty rate for its passenger vehicle and light truck tires from China. Despite a restructuring that reduced Chem China’s direct ownership to 36.9%, the DOC determined that Chem China retained control over Pirelli through its ability to appoint a majority of board members at Pirelli Italy, which influenced Pirelli China’s management. Consequently, DOC denied Pirelli’s request for a separate rate and applied the China-wide anti-dumping duty rate.

NMEs are presumed to be under government control unless they demonstrate both de jure and de facto independence. To rebut this presumption, an exporter must prove it sets prices independently, negotiates contracts autonomously, selects management without state influence, and retains its sales proceeds. DOC found that Pirelli failed to demonstrate independence from state influence, particularly in management selection and governance.

2.1 WHY PIRELLI’S “SEPARATE RATE” REQUEST WAS DENIED

Pirelli argued that Chem China’s minority ownership (36.9%) did not equate to government control, citing Italian corporate governance laws and its relisting on the Milan Stock Exchange with an “independent” board. However, DOC found that Chem China retained effective control through its ability to appoint a majority of board members at Pirelli Italy, which influenced Pirelli China’s leadership. DOC determined that this level of state involvement justified denying Pirelli a separate rate. As a result, Pirelli was assigned the 76.46% China-wide rate, rather than a lower, company-specific margin.

2.2 THE NME ANALYSIS: WHY PIRELLI LOST ITS SEPARATE RATE

1. Ownership Restructuring: Chem China restructured its ownership of Pirelli during the review period. Despite formally holding only 36.9% of Pirelli, the Chinese government maintained control by appointing eight of fifteen board members at Pirelli Italy. Since Pirelli China was a wholly owned subsidiary of Pirelli Italy, this structure effectively enabled government influence over Pirelli China’s management. No other shareholder held more than 3% of Pirelli, reinforcing Chem China’s disproportionate influence.

2. Board Composition & Management Control: Pirelli argued that 11 of 15 Pirelli Italy board members were not employed by Chem China or the Chinese government, and that 10 of the 15 were not Chinese nationals. However, DOC concluded that what mattered was who had the power to appoint those individuals—not their employment status or nationality. Because Chem China’s appointment process ensured ultimate accountability to the Chinese government, Pirelli failed to prove the de facto independence needed for a separate rate.

3. Shareholder Agreement & Potential Control Beyond Ownership: Pirelli cited a shareholder agreement that granted exclusive authority to an Italian shareholder to appoint management. However, DOC found this insufficient for demonstrating independence because the Italian shareholder was contractually bound to follow business plans approved by the board, which was majority-appointed by Chem China. DOC looks beyond ownership percentages to assess whether the government can direct corporate decisions, including management selection and business strategy—which it found to be the case with Pirelli.

Pirelli’s case aligns with broader DOC policy in NMEs, where exporters are presumed to operate under state influence unless they conclusively prove otherwise. Even if the government holds only a minority stake, DOC examines whether it can still shape governance and decision-making. The ability to appoint a majority of the board is a clear sign of potential government influence over commercial decisions.

2.3 APPEALS AND FINAL OUTCOME

Pirelli appealed DOC’s decision to the Court of International Trade (CIT), arguing that the agency overemphasized Chem China’s minority stake and failed to consider Italian corporate governance laws. The CIT upheld DOC’s determination, finding that substantial evidence showed Pirelli remained under government control. The Federal Circuit likewise affirmed, concluding Pirelli had not established de facto independence. As a result, Pirelli remained subject to the 76.46% China-wide rate rather than an individual margin.

PREPARING FOR THE FUTURE: U.S. ANTI-DUMPING ENFORCEMENT

The Pirelli Tyre case reveals the complex nature of U.S. anti-dumping enforcement, especially for companies based in non-market economies (NMEs) like China. As the Trump administration signals a more protectionist stance under the “America First Trade Policy,” businesses should anticipate stricter scrutiny, higher duties, and broader enforcement measures.

For companies engaged in international trade, the key takeaways are clear:

1. Heightened Enforcement – With increased political and economic pressure to curb unfair trade, anti-dumping actions will likely expand, particularly against PRC-owned or controlled entities.

2. Proactive Compliance – Companies aiming for separate duty rates must demonstrate both de jure and de facto independence from state influence through robust corporate governance and clear documentation.

3. Effective Engagement – Staying involved with regulators at the rulemaking stage and thoroughly responding to investigations is crucial. Non-participation or incomplete submissions can result in steep country-wide rates exceeding 100%.

By strengthening compliance structures and consulting expert guidance, businesses can remain competitive and manage risks under “America First” anti-dumping enforcement.

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Disclaimer: The views expressed here are solely my own and do not represent the positions of my employer. They do not constitute legal advice nor create an attorney–client relationship.