DOJ Wades Into AD/CVD Case on Mattresses, Says New Duties Could Harm COVID-19 Response

The Department of Justice recently interceded in an antidumping and countervailing duty case on mattresses to warn that imposition of new tariffs could run counter to efforts to combat the COVID-19 pandemic. In a brief filed April 22 with the International Trade Commission, lawyers from DOJ’s Antitrust Division argued that new AD/CV duties could increase the price of mattresses, making it harder for hospitals to increase the number of beds they have available for patients with the disease.

“It is likely that the demand for mattresses has increased and will continue to increase significantly during the pandemic as communities around the country expand hospital capacity,” the brief said. “This demand may outpace domestic supply. If demand outpaces supply, it is possible that American industry will be able to thrive, but additional supplies will be needed, at least in the short term, to fill the gap and immediate need until American manufacturers can ramp up production.”

Noting that the petition for AD/CV duties alleged AD rates of 48% to more than 1,000%, DOJ said that, “indiscriminately imposing equivalent antidumping or countervailing duties could significantly increase mattress prices for consumers in the United States, and, more importantly, could potentially affect the supply of mattresses needed in hospitals and other health care facilities.”

The ITC’s preliminary injury determination in the cases are due May 15 (see 2004230027). If the ITC finds a “reasonable indication” of injury the cases will continue at the Commerce Department, which may impose AD/CVD cash deposit requirements when it reaches its preliminary determination, currently due in June for CV duties and September for AD duties. If the ITC doesn’t, the investigations will immediately end. The AD duty investigations cover mattresses from Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey and Vietnam, and the CV duty proceeding covers mattresses from China.

“Higher prices and reduced supply may impede hospitals’ ability to expand capacity and thereby impede communities’ abilities to respond to COVID-19 even in the short term,” the brief said. While DOJ didn’t suggest that the ITC should end the case, it did say that remedies should be “tailored” so as to not disrupt the COVID-19 response. For example, when considering whether to impose retroactive tariffs as a result of “critical circumstances,” a finding of “massive imports” may indicate increased demand from hospitals, not an effort to get around AD/CV duties, DOJ said.

DOJ also hinted that the normal process of imposing cash deposit requirements at the preliminary stage may not be prudent. Normally, those payments may be refunded, resulting in little harm in the case of a false positive. “Imposing preliminary duties on mattresses during COVID-19, however, may lead to increased prices and lower mattress supply in the short term, which may harm American consumers and patients as it may impede immediate efforts to address COVID-19,” DOJ said.

The International Sleep Products Association filed a brief in response on April 24. The trade group, which represents U.S. manufacturers, says the DOJ provided “an inaccurate picture of the mattress industry’s ability to respond to the pending COVID-19 pandemic.” Contrary to what DOJ said, “the numerous state shelter in place orders issued across the country have closed most mattress retail stores nationwide and idled most mattress manufacturers. As a result, demand for mattresses has actually plummeted and ample excess capacity exists that can be restarted immediately to meet COVID-19 needs,” ISPA said.

The DOJ’s brief “also overlooks the fact that in the highly unlikely event that the COVID-19 crisis outstrips the ample and idle domestic mattress production capacity, producers in Canada and Mexico stand ready to supply these needs as well,” the ISPA said. “Neither of these countries’ exports are covered by the pending petitions. As next door neighbors to the United States, producers in both countries are well positioned to meet additional U.S. demand quickly should that need arise.”

“In short, the speculative statements that form the basis of the DOJ Statement are simply conjecture and are not supported by the facts,” the ISPA said.

Email ITTNews@warren-news.com for a copy of the DOJ brief and the ISPA’s response.