On March 13, 2015 the US Court of Appeals for the Federal Circuit held, in GPX International Tire Corp. v. United States, that the Department of Commerce (Commerce) can impose countervailing duties (CVD) on imports from nonmarket economies (NMEs) even if the goods at issue were imported before Congress amended the Tariff Act of 1930 (Tariff Act) (No. 2014-1188, (Fed. Cir. Mar. 13, 2015)) (GPX II).

Under the Tariff Act of 1930, Commerce is authorized to impose two different types of duties on imports that harm domestic industries:

Until 2006, Commerce's long-standing position was to impose CVDs only on imports from market economies because it was too hard to determine whether a NME country subsidized an industry. However, in late 2007, Commerce issued a final determination imposing CVDs on certain tires imported from China. This was the first time that Commerce imposed CVDs on imports from a NME. GPX International Tire Corp. successfully challenged this determination in the Court of International Trade. On appeal, the Federal Circuit upheld the Court of International Trade's decision and struck down Commerce's ability to impose CVDs on imports from NMEs without specific congressional authorization (GPX Int'l Tire Corp. v. United States, 666 F.3d 732 (Fed. Cir. 2011)) (GPX I).

Shortly after the Federal Circuit's GPX I decision, Congress amended the Tariff Act to authorize Commerce to impose CVDs on goods imported from NME countries and to allow Commerce to impose CVDs retroactively on goods that were imported before Congress amended the Tariff Act. In GPX II, the Federal Circuit granted a rehearing to determine the constitutionality of retroactive CVDs.

The Federal Circuit held that Commerce's retroactively imposing CVDs on goods imported from NME countries before Congress amended the Tariff Act did not violate either the Ex Post Facto or Due Process clauses of the US Constitution (US Constitution, Article I, § 9, clause 3; Amendment V).

Domestic manufacturers can continue to seek CVDs against goods that are unfairly imported into the US from NME countries, even if those goods were imported before Congress amended the Tariff Act.

In an earlier decision, which was issued after GPX I but before GPX II, the Federal Circuit upheld Commerce's general ability to impose CVDs on imports from NMEs but did not address Commerce's ability to impose retroactive CVDs (Guangdong Wireking Housewares & Hardware Co. v. United States, 745 F.3d 1194 (Fed. Cir. 2014)). Unless reviewed by the US Supreme Court, GPX II confirms Commerce's ability to retroactively impose CVDs on imports from NMEs.

For more information on antidumping and countervailing duties, see Practice Note, Antidumping and Countervailing Duties. For a suite of resources on international trade, see International Trade Toolkit.