New AD CVD Petitions – Push Lawn Mowers from China and Vietnam

On May 26, 2020, MTD Products Inc. (Petitioner) filed antidumping (AD) and countervailing duty (CVD) petitions against Certain Walk-Behind Lawn Mowers from China and Vietnam.  MTD produces lawn mowers that are sold under the Troy-Bilt, Bolens, Cub Cadet and Craftsman brands.

Under U.S. trade laws, a domestic industry can petition the U.S. Department of Commerce (“DOC”) and U.S. International Trade Commission (“ITC”) to investigate whether the named subject imports are being sold to the United States at less than fair value (“dumping”) or benefit from unfair government subsidies.  For AD/CVD duties to be imposed, the U.S. government must determine not only that dumping or subsidization is occurring, but also that the subject imports are causing “material injury” or “threat of material injury” to the domestic industry.

Before filing these petitions, MTD a few months ago had vigorously opposed the AD/ CVD petitions that were filed by Briggs & Stratton against vertical shaft engines from China in January 2020 and small vertical shaft engines from China two months later.  In those cases, MTD argued that AD/CVD duties should not be imposed on imported Chinese lawn mower engines.  Instead of blaming imports, MTD argued that Briggs & Stratton’s problems were caused by a variety of other issues unrelated to imports.  For example, consumer preferences had shifted away from gas powered mowers to electric/ battery powered mowers. Briggs & Stratton also had to deal with tariffs imposed on steel and Chinese imports which increased its manufacturing costs, making their engines more expensive than foreign engines that did not have to deal with those extra tariff costs.  Moreover, Briggs & Stratton made the dubious business decision to compete with its main customers; instead of focusing on designing, producing and selling engines to U.S. OEM lawn mower producers in the United States such as MTD, Briggs & Stratton decided to acquire a number of small lawn mower producers (Snapper and Murray) and directly compete in that market segment against some of its top customers.

The ITC, however, disagreed with MTD and other respondents and in both vertical shaft engine cases made affirmative preliminary injury determinations.  Seeing how the AD/CVD cases on vertical shaft engines could very well lead to AD/CVD duties being imposed, MTD realized that these AD/CVD duties would increase its lawn mower production costs and would affect its manufacturing supply chain, thus making them less competitive against other foreign lawn mower producers.  So from vigorously opposing AD/CVD duties on vertical shaft engines, MTD now strongly supports AD/CVD duties on imported lawn mowers.  MTD apparently decided it needed to bring its own AD/CVD petitions against lawn mowers from China and Vietnam to protect itself as it deals with the fallout from the vertical shaft engine AD/CVD cases.

This new round of AD/CVD petitions is yet another example of the trickle-down effect of protectionism.  Section 232 tariffs on steel and aluminum imports first begat a wave of AD/CVD cases filed by US producers of products using steel (e.g., steel kegs, vertical metal file cabinets, lawn mower engines).  These AD/CVD cases are now triggering another wave of cases from downstream industries (e.g., lawn mowers) seeking their own import protection.  As the economy reels under the strains of the COVID-19 pandemic, we very likely will see more AD/CVD cases being filed with more U.S. industries desperately trying to survive the economic downturn often by seeking protection from import competition. The cost of protecting each layer of U.S. manufacturers gets added to the cost of the goods ultimately purchased by U.S. consumers.

If you import products from China, be on guard; America’s ever-rising anger at China only increases the odds of more such cases.

The following is the vital information on this new lawnmower case:

— Scope

The petition identifies the merchandise to be covered by this AD/CVD investigation as walk-behind lawn mowers powered by an internal combustion engine with a power rating of less than 3.7 kilowatts which are rotary-powered grass cutting machines.

See here for the proposed scope definition from the petition.

— Alleged AD/CVD Margins.

Petitioner calculated estimated dumping margins ranging between 245.47 to 313.58% for China and from 285.10 to 416.00% for Vietnam. Petitioner did not provide any specific Chinese subsidy margin calculations.

— Named Exporters/ Producers

Petitioner included a list of companies it believes are producers and exporters of the subject merchandise.  See attached list of these companies here.

— Named U.S. Importers

Petitioner included a list of companies it believes are U.S. importers of the subject merchandise.  See attached list of these companies here.

–Estimated Schedule of Investigations.

May 26, 2020 – Petitions filed
June 15, 2020 – DOC initiates investigation
June 16, 2020 – ITC Staff Conference
July 10, 2020 – ITC preliminary determination
October 23, 2020 – DOC CVD preliminary determination (assuming extended deadline) (8/19/20 – unextended)
December 22, 2020 – DOC AD preliminary determination (assuming extended deadline) (11/2/20 – unextended)
May 6, 2021 – DOC final determination (extended and AD/CVD aligned)
June 20, 2021 – ITC final determination (extended)
June 27, 2021 – DOC AD/CVD orders issued (extended)