“Reasonable Indication” China Dumping Small Engines, Says USITC

04 May 2020

The United States International Trade Commission (USITC) has determined that there is a reasonable indication that the U.S. small engine industry is being materially injured by imports of small vertical shaft engines from China that are allegedly subsidized and sold in the United States at less than fair value.

In a vote May 1, USITC Chairman David S. Johanson and Commissioners Rhonda K. Schmidtlein, Jason E. Kearns, Randolph J. Stayin and Amy A. Karpel voted in the affirmative, which means the U.S. Dept. of Commerce will continue with its antidumping and countervailing duty investigations concerning imports of vertical shaft engines from China. A preliminary countervailing duty determination due on or about June 11, and its antidumping duty determination due on or about August 25.

Earlier this year, the Coalition of American Vertical Engine Producers (CAVEP), which includes Briggs & Stratton and Kohler Co., filed anti-dumping and countervailing duty petitions with the federal government, alleging that Chinese engine manufacturers are engines in the U.S. below market cost – the definition of dumping – and are receiving significant economic assistance from the Chinese government.

The Chinese engines in question are primarily used in the consumer lawn & garden and commercial turf industries, both of which are critical markets for the U.S. engine builders. The Chinese engines enter the domestic market as loose engines sold to manufacturers, as well as in equipment sold in the U.S. market.

It’s estimated that Chinese engines account for as many as 200,000 to 250,000 sales per year in the U.S., a figure that has grown significantly in the last three or four years, according to the petitioners.

As part of its dumping claim, the CAVEP alleges that the Chinese engines have a dumping margin – the amount by which the export price from the country in which the goods originated is less than the fair market price of the goods in that country – of 320% and more.

The countervailing duty claim suggests that Chinese engine manufacturers are receiving a range of economic subsidies from the Chinese government, such as debt restructuring and loans, capital injections, export assistance grants, export loans and credits, income tax reductions and import tariff exemptions.

The Commission’s public report Small Vertical Shaft Engines from China (Inv. Nos. 701-TA-643 and 731-TA-1493 (Preliminary), USITC Publication 5054, May 2020) will contain the views of the Commission and information developed during the investigations.

The report will be available after June 1, 2020; when available, it may be accessed on the USITC website at: https://www.usitc.gov/commission_publications_library.

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