The U.S. Department of Commerce has imposed a hefty 60.81% provisional tariff on Hyundai Electric's transformers once again. The decision came out less than one month after the U.S. Court of International Trade put the brakes on the department’s unreasonable tariff imposition practice.
According to the Korean transformer industry on September 5, the Commerce Department, which is conducting the fifth annual review of Korean-made transformers, imposed the massive provisional tariff on products exported by Hyundai Electric. The tariff rate was the same as the one imposed during the third and fourth reviews.
The Commerce Department annually reviews duties on imported products and decides whether or not they were dumped. It resets tariff rates on dumped imports. However, a 0% tariff was levied on Hyosung transformers this time, although they were slapped with the same tariff as that on Hyundai Electric in the previous reviews.
The department used the Adverse Facts Available (AFA) provision once again this time. The AFA clause is an investigative method through which the department arbitrarily levies a tariff if it judges that a company failed to cooperate fully with its investigation. The AFA provision was repeatedly used in previous investigations.
Before the provisional ruling, many observers forecast that a lower tariff would be imposed on Hyundai Electric transformers, as the U.S. Court of International Trade (CIT) ruled against the department’s practice of imposing high tariffs based on the AFA provision last month.
The CIT, which was checking the Commerce Department’s third review, found that the department abused the AFA clause when it set the high tariff on Hyundai Electric. “Since the U.S. Department of Commerce did not clarify requirements, Hyundai Heavy Industries (currently Hyundai Electric) could not submit accurate data," the CIT concluded.
However, some experts say that if the Commerce Department imposes a tariff bomb once again by invoking the AFA clause, nobody will be able to stop it. If a correction order is given, it may give Hyundai Electric a short break. But if the department imposes a hefty tariff in the next annual review, there will be no magic bullets that will invalidate it.
The only remaining choice for Hyundai Electric, which will have trouble exporting its transformers to the US, is the company’s expansion of transformer production in the U.S. So the company has decided to move its production base to the U.S.