US duties on Chinese containers to be refunded after trade commission ruling

US duties on Chinese containers to be refunded after trade commission ruling

Temporary duties placed on Chinese 53-foot domestic dry containers will be refunded after a U.S. trade commission ruled earlier this week that Chinese manufacturers did not have an unfair advantage over their North American competitors.

The U.S. International Trade Commission announced Tuesday it would not to uphold lower courts’ rulings that sided with Stoughton Trailers, a Wisconsin-based manufacturer of transportation equipment for trucks and train that claimed Chinese manufacturers were “dumping” containers in the U.S. market.

In April last year, Stoughton, one of two North American manufacturers of 53-foot-long corrugated steel boxes, the backbone of long-distance domestic intermodal freight, filed a federal unfair trade petition against the Chinese makers of dry-freight containers.

Stoughton claimed that its Chinese competitors, subsidized by the Communist government, had been offering their products at prices lower than they cost to make.

"China has 'dumped' domestic container products into the U.S. market at prices that are well below fair value," Stoughton President Robert Wahlin said in the statement.

As a result, Chinese manufacturers now control 95 percent of the U.S. market for 53-foot containers, Wahlin said, and left his company's 300,000-square-foot factory in Evansville, Wisconsin, all but idle.

After two U.S. Department of Commerce decisions, issued in September and November, a temporary tariff was placed on Chinese imports at U.S. docks. Cash deposits ranging from 35 percent to 160 percent, depending on the manufacturer, were required to be escrowed on 53-foot domestic dry containers from China.

After Tuesday’s decision, all money collected will be returned, said intermodal analyst Larry Gross.

“All the duties were out in escrow so they are refunded,” Gross, a senior consultant at FTR Associates told JOC.com in an email.

Representatives for the International Trade Commission were unavailable for comment Thursday and were thus unable to estimate how much had already been collected from the temporary tariffs. Gross, however, was confident that all money derived from the duty will be reimbursed.

As for Stoughton?

“The situation for U.S. builders is they just have to out compete the Chinese,” Gross said.

Had the U.S. trade commission ruled in Stoughton’s favor, analysts estimate the cost of 53-foot containers could have doubled. Hub Group, an intermodal marketing company, told investors the price per container could go from $11,000 to $20,000.

The resulting shortage in new containers could have meant tighter pricing on domestic container moves, too.

Those scenarios were avoided with Tuesday’s decision, but it was still uncertain Thursday what legal recourse Stoughton may have to pursue the case further.

Contact Reynolds Hutchins at reynolds.hutchins@ihs.com and follow him on Twitter: @Hutchins_JOC.