Cheap van trailers face new duties, but price shock may be limited

A variety of cheap van trailer imports got hit with another round of duties as a federal trade investigation moves further along, but the price tag may not go up as much as some anticipated.

U.S. manufacturers claim van trailers coming from Canada, China and Mexico have flooded the market in the United States, usually significantly cheaper than trailers produced domestically. According to the American Trailer Manufacturers Coalition, those countries subsidized numerous trailer makers to lower prices.

That coalition says that dumping margins have been as high as 300%, 1,400% and more than 430% from Canada, China and Mexico, respectively. It argues those imports substantially harmed domestic trailer manufacturers. The American Trailer Manufacturers Coalition, which includes Great Dane, Stoughton and Wabash, petitioned the federal government to launch an investigation and levy appropriate duties.

The federal government agreed to investigate. In June, the Department of Commerce issued preliminary countervailing-duty determinations for Chinese and Mexican van trailer imports, finding that manufacturers in both countries received government subsidies.

That report found that China and Mexico did provide subsidies to van trailer manufacturers. Hyundai and Utility Trailers out of Mexico had a 2% subsidy. Several Mexican producers that did not cooperate with the investigation received subsidy rates of nearly 63%.

China was found to provide much higher subsidies. While several van trailer manufacturers received a rate of 82%, companies that ignored investigators saw that rate skyrocket to nearly 130%.

Canada, on the other hand, escaped countervailing duties. The Department of Commerce dropped that part of the investigation after the American Trailer Manufacturers Coalition withdrew the claim.

June’s announcement still left open antidumping duties for Canadian and Mexican van trailers. Another preliminary determination recently answered those questions.

Canada escaped the subsidy investigation, but not the antidumping investigation. However, the dumping margins are nowhere near what the American Trailer Manufacturers Coalition suggested in its petition.

The federal government’s preliminary numbers show dumping margins as high as 80%, but only for a handful of Mexican van trailers. Margins are in the single digits for most Canadian and Mexican trailers.

Overall, Chinese van trailers got hit hard, but duties on Canadian and Mexican trailers are far below where U.S. manufacturers suggested they could be.

What does this all mean?

That’s a lot of numbers to unpack, so how do they translate to van trailer prices?

The cost of importing select Chinese trailers could go up substantially, but the potential duty exposure for trailers from major Mexican manufacturers such as Hyundai and Utility is about 4-10%. That’s not nothing, but it is also not the 1,400% margin U.S. manufacturers initially alleged. All van trailer duties are preliminary and can go up or down, depending on the final determination.

While the Department of Commerce determines whether dumping or subsidies occurred and at what rate, the International Trade Commission must now decide whether those imports injured or threatened the U.S. industry. A hearing for the final injury phase was scheduled for Aug. 27.

“The data and evidence presented demonstrates that the American trailer manufacturers have been injured and are threatened with further injury if trade remedies are not imposed against imports of van trailers from China, Mexico and Canada,” Robert E. DeFrancesco, counsel to American Trailer Manufacturers Coalition, said in a statement. “If given a level playing field American trailer manufacturers can compete with anyone and will strengthen the entire American supply chain. An affirmative determination by the ITC is critical to saving this great American manufacturing industry and their 50,000 workers from the predatory trade practice of China, Mexico and Canada.” LL