Countervailing Duties, Antidumping Tariffs, and the Byrd Amendment: A Welfare Analysis

This paper determines the effect that offset payments under the Continued Dumping and Subsidy Offset Act (CDSOA also known as the “Byrd Amendment”) have on tariff levels that are lobbied for by U.S. producer groups. We derive the optimum antidumping tariff that would maximize the welfare of producers receiving CDSOA offset payments. We compare and contrast this newly derived “optimal antidumping tariff” (that maximizes the sum of producer surplus and tariff revenue) with the optimal revenue tariff (that maximizes tariff revenue alone) and the optimal welfare tariff (that maximizes the sum of consumer surplus, producer surplus, and tariff revenue). We find that prior to the CDSOA, U.S. producers would always lobby for prohibitive tariffs that maximize producer surplus. However, under the CDSOA, producers will, in most cases, lobby for a tariff that is not prohibitive but is still higher than the optimal revenue or optimal welfare tariffs.