The federal government has decided to keep high tariffs on Ukrainian exports of ammonium nitrate even though the fertilizer is now cheaper to produce in the U.S.

The U.S. International Trade Commission has ruled that dropping the tariffs would likely cause "material injury within a reasonably foreseeable time" to domestic fertilizer manufacturers.

Imports of nitrogen can have an impact on the prices that U.S. farmers pay for the fertilizer. An influx of foreign nitrogen has been credited with price declines for nitrogen over the past year.

The government imposed antidumping duties of more than 150 percent on ammonium nitrate from Ukraine more than a decade ago, which has effectively stopped exports from that country.

Federal agencies can impose such tariffs if they find that a foreign supplier is "dumping" a product in the U.S. below the cost of production to the detriment of domestic competitors.

Since the duties were imposed in 2001, advances in the domestic extraction of natural gas -- the major component of the fertilizer -- have caused its price to plummet for U.S. manufacturers.

Ukrainian producers urged the U.S. International Trade Commission to discontinue the tariffs "because the U.S. market is in a strong competitive position in relation to imports," according to a document submitted to the agency.

The Ukrainian government also weighed in, arguing that the price of natural gas is now four times higher in Ukraine than in the U.S., "which puts Ukrainian producers in a much worse competitive position compared to U.S. producers," according to a document submitted to ITC.

Improved agricultural production in Ukraine has also increased demand among its own farmers for ammonium nitrate, as total farm production has increased by 55 percent since the duties were imposed, the document said.

Previously, exportable supplies of nitrogen were high because the "chaotic situation in Ukraine's agriculture sector" after the Soviet Union's collapse had eroded demand for the fertilizer, the document said.

Two U.S. manufacturers -- CF Industries and El Dorado Chemical Co. -- countered that Ukrainian production capacity was large and is expected to expand next year as a new factory begins production.

Despite the dropping price of natural gas, U.S. manufacturers still face pressures from increased security regulations on ammonium nitrate, the companies said in a document submitted to ITC.

The fertilizer is explosive and has been used to build bombs, such as the one that destroyed the federal building in Oklahoma City in 1995.

Proposed rules by the U.S. Department of Homeland Security are expected to prompt "supply chain actors in the United States to exit the ammonium nitrate market," reducing overall demand for the product, the document said.

Furthermore, it's highly unclear exactly what the Ukrainian producers are paying for natural gas, as they have been able to continue "their aggressive pricing" of the product in other export markets, the document said.

"This demonstrates that the Ukrainian industry can and will undersell and price as necessary to export (high density ammonium nitrate), regardless of what it is actually paying for natural gas," the document said.