Hyundai Elec Wins Final Victory in Lawsuit with US Department of Commerce
High Tariff Reassessment Ruling Also Follows
▲An 800kV ultra-high voltage circuit breaker manufactured by Hyundai Electric.
[Asia Economy Reporter Oh Hyung-gil] The high anti-dumping tariffs imposed by the U.S. government on Korean-made transformers exported to the United States over a decade ago have either been eliminated or are expected to be reduced, resolving a long-standing issue.
According to the industry on the 21st, Hyundai Electric, a power equipment and energy solutions affiliate of Hyundai Heavy Industries Group, recently won the final verdict in the anti-dumping tariff lawsuit on transformers against the U.S. government. On the 9th, ABB, a Swiss power equipment manufacturer and the plaintiff, withdrew its appeal to the Supreme Court, finalizing the ruling by the U.S. Court of Appeals for the Federal Circuit (CAFC) that had favored Hyundai Electric.
Anti-dumping tariffs are taxes imposed when the exporting country sells products at unfairly low prices, causing damage to the importing country's industry. Korean-made transformers began to be investigated for anti-dumping in 2011 following complaints from U.S. companies such as ABB and Delta Star.
The U.S. Department of Commerce sets tariff rates annually for specific export volumes based on investigation results. In the fourth administrative review of anti-dumping in 2018, a tariff rate of 60.81% was imposed on transformers exported to the U.S. by Hyundai Electric (then the electrical and electronics division of Hyundai Heavy Industries) from August 2015 to July 2016. Additionally, tariffs of 37.42% were imposed on Hyosung Heavy Industries and Iljin Electric, and 15.74% on LS Electric.
In response, Hyundai Heavy Industries filed a lawsuit with the Court of International Trade (CIT) in March of the same year against the Department of Commerce's decision. Following a ruling in July last year to recalculate the tariff rate, the CIT approved a 0% anti-dumping tariff rate.
However, ABB appealed again to the CAFC in September, and in August this year, the CAFC upheld the CIT's decision. With ABB's recent withdrawal of the Supreme Court appeal, the anti-dumping tariff burden has finally been lifted.
Hyundai Electric recorded a net profit of 100.6 billion KRW in the third quarter by reflecting $83.69 million (approximately 101.1 billion KRW) recognized as costs to cover tariffs in non-operating expenses. This significantly exceeded the 3.9 billion KRW recorded in the same period last year.
Following this lawsuit result, Hyundai Electric is expected to gain a favorable position in other ongoing anti-dumping lawsuits. The company is currently involved in lawsuits related to the second administrative review filed in 2016 and the sixth administrative review filed in 2020.
In the lawsuit related to the second administrative review, the CIT accepted the 16.13% tariff rate calculated by the U.S. Department of Commerce and issued a final ruling. Hyundai then appealed to the CAFC in July 2020, and in May this year, the CAFC overturned and remanded the case, prompting the CIT to recalculate the tariff rate. Regarding the sixth lawsuit, the CIT ordered a recalculation of the 60.81% anti-dumping tariff rate in May.
Although the final results have not yet been announced, there is cautious optimism that the tariff rates may be lowered.
A Hyundai Electric official explained, "We have already reflected potential future losses related to the U.S. anti-dumping tariff lawsuits in our financial statements, and there is a possibility of reversing losses depending on court rulings. Since 2019, we have been pursuing local production in the U.S. to mitigate anti-dumping risks."
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