Legal Definitions - countervailing duty

Definition: A tax imposed on manufacturers of imported goods to protect domestic industry by offsetting subsidies given by foreign governments to those manufacturers.

Example: If a foreign government provides subsidies to its steel manufacturers, making it cheaper for them to produce steel, the U.S. government may impose a countervailing duty on imported steel from that country to level the playing field for domestic steel manufacturers.

Explanation: The countervailing duty is a measure taken by the government to protect domestic industries from unfair competition due to foreign subsidies. In the example given, the U.S. government imposes a countervailing duty on imported steel to offset the advantage given to foreign steel manufacturers by their government's subsidies. This makes it more expensive for foreign steel to enter the U.S. market, giving domestic steel manufacturers a chance to compete.