What Exactly Is an Anti-Dumping Duty?

When a home government applies a protectionist charge on goods from abroad that it deems priced below fair market value, it is known as an anti-dumping duty. Dumping is the practice of a firm exporting a good at a price much less than what the company typically charges in its home market.

Many nations tax goods they feel are being dumped in their domestic market to defend their separate economies because they may undermine domestic companies and the local economy.

Recognizing Anti-Dumping Obligations

The International Trade Commission (ITC), a separate federal organization, enforces anti-dumping tariffs in the United States. They base their decisions on inquiries by the ITC and the Department of Commerce and recommendations they get from the American Department of Commerce. The charges levied on these commodities frequently outweigh their actual worth. Anti-dumping duties are often imposed when a foreign business sells a good for a lot less than it costs to make it.

Anti-dumping duties may result in higher pricing for domestic customers, even if its primary goal is to protect domestic employment. Additionally, over time, anti-dumping tariffs may lessen the worldwide rivalry domestic producers of comparable goods face.

An international body that deals with international trade regulations is called the World Trade Organization (WTO). The WTO also enforces international trade regulations, such as the global control of anti-dumping practices. The WTO doesn’t get involved in the dumping-related operations of businesses. Instead, it focuses on governments’ response—or lack thereof—to the practice of dumping.

In principle, governments are allowed to take action against dumping under the WTO agreement “if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry.”

This action must be justified to sustain the WTO’s commitment to free-market principles. Anti-dumping taxes could cause market distortion. Governments often cannot assess the fair market value of any item or service in a free market.

Typical Anti-Dumping Duty

United States Steel Corp., Nucor Corp., Steel Dynamics Inc., ArcelorMittal USA, AK Steel Corp., and California Steel Industries, Inc. are American steel producers that filed a complaint with the ITC and the U.S. Department of Commerce in June 2015. They complained that numerous nations, especially China, were unjustly keeping steel prices low by dumping steel onto the American market.

Following a review, the U.S. said one year later that it would impose combined anti-dumping and countervailing import charges of 522% on certain steel imported from China. China complained about the tariffs imposed by the Trump administration to the WTO in 2018. The Trump administration has since kept pressing its case against what it sees as unfair trade practices by the Chinese government and other trading partners at the WTO.

Conclusion

• When a home government applies a protectionist charge on goods from abroad that it deems priced below fair market value, it is known as an anti-dumping duty.
• Many nations apply taxes on goods they feel are being dumped in their domestic market to defend their economies because they may undermine domestic firms and the local economy.
• Anti-dumping duties may result in higher pricing for domestic customers, even if its primary goal is to protect domestic employment.
• Anti-dumping tariffs may eventually lessen the foreign competitiveness faced by domestic producers of comparable goods.
• The International Trade Commission (ITC), a separate federal organization, is in charge of enforcing anti-dumping tariffs in the United States.
• International trade regulations, such as the global regulation of anti-dumping measures, are also operated by the World Trade Institutions (WTO). This international institution deals with the laws of commerce between states.