AD/CVD orders can double the duty on apparel overnight. How the orders work, why the rates vary by exporter, and how brands model the risk before it hits their margins.
Antidumping duties offset imports sold in the US below their fair value, and countervailing duties offset imports that benefited from foreign government subsidies. Both are imposed through orders that name specific products and specific countries, following investigations by the Commerce Department and the International Trade Commission. Once an order is in place, every covered import pays the extra duty on top of the normal tariff, and the order stays in force for years, reviewed annually.
Apparel is a frequent target because the industry is price-sensitive and production concentrates in a few exporting countries. Orders can cover broad categories like knit shirts or narrow ones like specific fabric blends. The scope language is technical, and products that seem safely outside an order can fall inside it on the basis of a fiber-content threshold or a construction detail. Reading the scope notice, not the headline, is the only way to know whether your goods are covered.
The headline rate in an AD/CVD order is not one number. Commerce assigns individual rates to exporters that participated in the investigation and cooperated, and those rates reflect each exporter's actual pricing and subsidy picture. Exporters that did not participate get the country-wide rate, which is typically the highest. For apparel, this means your factory choice is a duty choice: a shirt from a cooperative exporter with a low calculated rate and the same shirt from a non-participant can differ in duty by an order of magnitude.
The rates also move. Annual administrative reviews recalculate exporter-specific rates, so a factory with a low rate this year can have a high rate next year. New shippers can request their own reviews to get an individual rate instead of the country-wide one. Brands that treat AD/CVD as a static input get surprised; brands that track review calendars and their factories' participation status can forecast the duty bill a year out.
The first step is scope mapping: take your product specs and check them against every active AD/CVD order for your sourcing countries. This is a product-by-product exercise, because a fiber blend that is safe in one order is covered in another. The second step is exporter mapping: for each factory, find its current rate under each applicable order, and know whether it is participating in the next review. A factory with no individual rate is a factory paying the country-wide rate.
Then build the scenarios. Model the landed cost at the current rate, at the country-wide rate, and at a stress rate from the last review cycle. If the country-wide scenario breaks your margin, you have a concentration risk that sourcing diversification or a new-shipper review can address. The brands that handle AD/CVD well treat it as a sourcing input alongside price and quality, negotiated with factories the way freight rates are negotiated with carriers.
New investigations move fast relative to sourcing cycles. From petition to preliminary duties can take months, and preliminary duties apply to entries after the preliminary determination, which means goods already on the water can arrive into a new duty. Importers caught in a new order face a choice: absorb the duty, renegotiate with the factory, or shift production. None of these happen quickly, which is why monitoring petitions matters as much as monitoring orders.
Suspension of liquidation is the mechanism that makes new orders bite retroactively. When Commerce issues preliminary affirmative determinations, customs suspends liquidation and requires cash deposits at the preliminary rate. The final rate, set years later in some cases, determines what you actually owe, with refunds or additional bills to follow. Keep reserves for the gap between the deposit rate and your modeled final rate, and document everything, because the reconciliation at the end of a case rewards importers with clean records.
Transshipment to evade AD/CVD is illegal and actively enforced, with severe penalties. Legitimate production moves, where substantial transformation happens in the new country, are different from relabeling. If the move is real, document the transformation; if it is just routing, do not do it.
Orders are reviewed every five years in sunset reviews and can be revoked if the domestic industry no longer needs protection. In practice many orders persist for decades. Do not plan sourcing around an order disappearing; plan around the current rate and the review calendar.
The importer of record pays, which in most DTC structures is the brand or its customs broker's client. Factories do not pay it directly, which is why brands must verify factory-specific rates themselves rather than taking a supplier's word for the duty cost.