Global trade is involved in almost every sector of business including the intricate supply chains that support pharmaceuticals and nutraceuticals. This covers end-to-end — from raw materials to finished medicines that are being traded across borders daily. To ensure fair competition in this interconnected market, governments deploy trade laws designed to counteract unfair pricing and subsidies.
One high-profiling case that is currently unfolding in its final stages in the United States focuses on hard empty capsules (HECs). HECs are essential components in many drug and supplement products. This particular case focuses on these imports from Brazil, China, India and Vietnam.
After months of inquiry, the U.S. Department of Commerce (DOC) issued final affirmative determinations finding that HEC imports from these nations are being dumped and subsidized. This development could significantly affect capsule sourcing and pricing for U.S. buyers and manufacturers. It is important to understand what these decisions mean and how stakeholders should be preparing for the aftermath of this verdict.
What Are Antidumping and Countervailing Duties
To understand the big picture of this decision with imported HECs, it is important to first understand what antidumping (AD) and countervailing duties (CVD) are. Antidumping duties are trade measures imposed when a foreign producer sells goods in the U.S. at prices below their fair value. The value is often well below what the goods sell for in their home markets and/or below production cost. These low prices can unfairly undercut domestic producers and prevent them from entering or competing in the market.
Countervailing duties target foreign companies that receive government subsidies that artificially lower production costs. These include things such as tax breaks, subsidized energy, or export financing which gives them an unfair advantage as well.
The dual purpose of AD and CVD laws is to protect U.S. industries from unfair competition while maintaining an open and competitive market. In this case, the investigations assess whether HEC imports from Brazil, China, India and Vietnam harm the U.S. capsule industry by undercutting domestic producers.
The HEC Investigation: From Petition to Final Decision
The HEC case began in 2024 with a petition from a major U.S. capsule manufacturer alleging that imports from these four countries were being dumped and that producers benefited from unfair government subsidies.1 Over the following year, the DOC and the U.S. International Trade Commission (ITC) conducted detailed investigations into pricing, subsidy practices, and the effect it had on the U.S. industry.
On December 19, 2025, the DOC issued its final affirmative determinations for both AD and CVD investigations.1 These determinations concluded that imports of HECs from the four countries were indeed sold at unfairly low prices and received advantageous subsidies that distorted trade in this market. In addition, final duty margins were also established for specific producers and exporters in each country.
The findings explicitly stated the final dumping margins as follows:
- Brazil: Producers were found to have a dumping rate of 77.63%
- China: 28 different producers and exporters were all found to have a dumping rate of 18.71% along with a China-wide entity
- India: Dumping rates ranged from 26.69% to 10.66% with “all others” at 18.68%
- Vietnam: The Vietnam-wide entity faced a 47.12% dumping rate
These findings represent the percentage by which prices are considered to be unfairly low relative to normal value. Imports found to be dumped at these kinds of rates are subject to duties reflecting those margins.
The DOC also calculated the level of government subsidization for HEC producers in each country as follows:
- Brazil: Subsidy rate of 10.67%
- China: Subsidy rate averaged 6.90%
- India: Subsidy rate of 7.06%
- Vietnam: Subsidy rate of 2.45%
These subsidies can arise from many different sources such as financial support to reduced taxes and energy costs. They form the basis for CVD duties that are imposed to neutralize unfair advantages within this market. Specific producers and exporters can be found on the DOC website for this case for any buyers that have known entities in these countries.1
Why There’s So Much Focus on This HEC Case
HECs are critical components in pharmaceuticals and nutraceuticals with a supply chain that spans the entire globe. The U.S. often sources these HECs from the countries under investigation due to the major cost advantage and production capacity for large scale companies. This case illustrates how rapid shifts in capacity and pricing can greatly affect and destabilize competitive balance in this market.
The COVID-19 pandemic caused a spike in demand for HECs, that later normalized, leading to a shift in the market where investments overseas had excess capacity and reduced prices. This raised concerns about dumping along with reports of government incentives and subsidies to producers suggesting unfair support as well, which led to the petition filing in 2024.
This case remains an important reminder that major events can cause fluctuations in markets that might not always be good for long-term investment. It is important that checks and balances exist and that policies are implemented when needed to retain an even playing field within the market.
How Duties Will Be Applied
Once final determinations like these are issued, the DOC moves to publish duty orders in the Federal Register. This is expected to take place around February 9, 2026.1 At that point, AD and CVD duties become legally enforceable on imports of HECs from these four countries.
In these cases, the duties are paid by the foreign exporters or producers. The U.S. Customs and Border Protection (CBP) collects the duties upon entry into the U.S. Unfortunately, this cost can ultimately be passed down to U.S. consumers, similar to tariffs, if the foreign exporters decide not to absorb the costs. This would result in higher costs to consumers for the same goods if the companies can retain a competitive advantage at these new prices.
What to Do Now
There are several strategies that should be implemented to deal with the fallout of this verdict. Buyers should audit their current HEC supply chains to identify exposure to these affected countries. It would be beneficial to engage with suppliers to understand exactly how duties may affect pricing and delivery. A safety net would be to explore alternative sources of HECs in order to diversify risk.
Another important consideration is to always collaborate with quality and regulatory teams to ensure compliance through changes within a company supply chain. The more proactive the planning is for these significant potential changes, the greater the chance of successfully navigating and adapting to the constant and rapid fluctuations in the global market.
References
- U.S. Department of Commerce. Final Affirmative Determinations in the Antidumping and Countervailing Duty Investigations of Hard Empty Capsules from Brazil, the People’s Republic of China, India, and the Socialist Republic of Vietnam. Trade.gov. Published December 19, 2025. Accessed January 14, 2026. https://www.trade.gov/final-affirmative-determinations-antidumping-and-countervailing-duty-investigations-hard-empty