What it is
A countervailing duty (CVD) is a specific type of import tax levied by an importing country on goods whose production or export has been subsidized by the exporting country's government. These subsidies can take various forms, such as direct payments, tax breaks, or preferential loans, giving foreign producers an unfair cost advantage in the international market. CVDs aim to neutralize this advantage.
The U.S. Department of Commerce investigates claims of unfair subsidies, and if confirmed, the U.S. International Trade Commission determines if domestic industries are harmed. If both conditions are met, Customs and Border Protection imposes the CVD, making the subsidized imports more expensive. This can affect prices for consumers, alter trade flows, and trigger retaliatory tariffs from the exporting country.
Why it matters
CVDs can increase import prices, affecting the cost of goods for consumers and potentially escalating trade disputes between countries.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice