The U.S. Department of Commerce will instruct U.S. Customs and Border Protection to collect a cash deposit or bond of anywhere from 4 percent to 118 percent of the value of certain steel nail imports from the Peoples Republic of China and the United Arab Emirates. The government announced its preliminary findings in the anti-dumping duty investigation on imports of steel nails from the two nations on Jan. 16.
The move is the result of preliminary findings announced Jan. 16 of an anti-dumping duty investigation on imports of steel nails. The merchandise covered by the investigations are certain steel nails with a length up to 12 inches, with a variety of finishes, heads, shanks, points and sizes.
While the ruling appears to be an early victory for the handful of domestic nail mills that petitioned the International Trade Commission for an investigation, sources close to the matter say the anti-dumping situation could take years to resolve.
According to the Department of Commerce and U.S. anti-dumping law, dumping occurs when importers sell goods within the United States at less than what is known as “fair value,” causing material injury or threat of material injury to the domestic industry, as determined by the International Trade Commission.
“Price discrimination hurts American manufacturers,” said David Spooner, assistant secretary for the U.S. Import Administration. “The administration is committed to aggressively enforcing America’s trade remedy laws in order to achieve strong and fair relationships with our trading partners.”
By far, the largest tariffs will be imposed upon Chinese manufacturers.
Significant nail-makers include Paslode Fasteners, with a 20.77 percent tariff; and Suzhou Xingya Nail, Senco-Xingya Metal Products and Wuxi Chengye Metal Products, which will incur a 44.57 percent tariff. Other Chinese manufacturers will incur tariffs ranging from 29.36 percent to 118.04 percent. UAE manufacturers will incur a 4.47 percent tariff.
According to the Department of Commerce, the tariffs were determined according to each manufacturer’s dumping margin, or price sold in the United States below fair value.
Under certain circumstances, selling less than fair value may also be identified by comparing the foreign firm’s U.S. sales price to the price it charges in other export markets or to the firm’s cost of producing the merchandise, taking into account the selling, general, and administrative expenses and profit.
During the initial International Trade Commission investigation, Paul Rosenthal, the attorney representing the petitioners, said that imports on Chinese and UAE nails have increased more than 70 percent in volume in the past three years and threaten the continued existence of the U.S. nail industry.
“The surge in imports from China and UAE has caused substantial harm to the domestic producers,” he said, adding that the imports have contributed to “the shutting down of facilities” and “the laying off of workers.”
The U.S. petitioners for the investigation were Mid Continent Nail; Davis Wire; Gerdau Ameristeel; Maze Nails; Treasure Coast Fasteners; and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union.
But U.S. nail manufacturers are still unsure as to what the preliminary findings might mean for them.
“After 130 days, it’s possible that they’ll decide the tariffs aren’t warranted, or that they’re not enough, or that they’re too high. We really won’t know much until June,” said Tom Koch, sales manager for Maze Nails.
While Koch seemed hopeful that the tariffs would level the playing field for U.S. nail manufacturers, he admitted that U.S.-made nails would most likely still cost more.
“We don’t pay our workers 8 cents per day, and we have to worry about things like OSHA and Social Security,” he said. “These are the things the Chinese manufacturers don’t have to worry about.”
Others see the tariffs as harmful for the consumer. Hal Look, vp-marketing and business development for ORCO Construction Supply, said that while the tariffs could provide a temporary solution for the domestic manufacturers, the move ultimately increases nail prices for an already struggling U.S. housing market.
“The person who is going to get screwed on this deal is the consumer,” said Look.
Look said that the tariffs could reduce the imports by as much as 75 percent, which would increase demand on domestic manufacturers past their own capacity, creating demand issues and price increases.
“I think this thing is going to increase the total cost of goods on wire products—that’s not a good thing,” he said.
Look, who testified during the initial International Trade Commission inquiry in July 2007 on behalf of Dubai Wire, said that while Chinese manufacturers were taking advantage of tax breaks and government subsidies from their own government, he doesn’t agree that the UAE should have been targeted, as there is only one mill in the entire country.
“At least they’re only being hit with a 4 percent tax,” he said.
“Do some of these Chinese manufacturers deserve this? Yes. To what degree does this tariff correct the unfair conditions, I really can’t say,” Look added.
Mona Zinman, co-CEO of Prime Source, pointed out in the initial hearing that the tariff would only cause many of the Chinese manufacturers to move their operations elsewhere.
“A lot of the factories that are now operating in China actually are either Taiwanese or are Korean, who still have the facilities in the original country,” she told the ITC. “If there is a dumping duty order imposed where the cost comes very high, what they’ll simply do is take those machines, ship them back to [the original] factories and resume production.”
Zinman maintained that Prime Source sought imported nails only after it was apparent that domestic importers could not handle the capacity for the U.S. market.
The Department of Commerce is scheduled to release its final determination on the case June 5.