Legal Definitions - antidumping tariff

An antidumping tariff is a special tax imposed by a government on imported goods that are being sold in the domestic market at an unfairly low price. This practice, known as "dumping," occurs when a foreign company sells products in another country for less than their normal value, which might be their price in their home market or their cost of production. The primary purpose of an antidumping tariff is to counteract this unfair pricing and protect domestic industries from harm caused by such competition.

• Example 1: Steel Pipes

  Manufacturers of steel pipes in Country A observe that imported steel pipes from Country B are being sold in Country A at prices significantly below what it costs to produce them in Country B, and also below the price they sell for in Country B's own market. This makes it impossible for Country A's domestic steel pipe companies to compete, leading to job losses and factory closures.

  After an investigation confirms that Country B's companies are indeed "dumping" steel pipes, Country A's government imposes an antidumping tariff on all imported steel pipes from Country B. This tariff increases the price of the imported pipes, making them more competitive with domestically produced pipes and mitigating the harm to Country A's industry.

• Example 2: Frozen Shrimp

  Fishermen and seafood processors in Country X notice a sudden influx of frozen shrimp from Country Y being sold at extremely low prices in Country X's supermarkets and restaurants. These prices are so low that they are less than the cost for Country X's domestic industry to catch and process shrimp.

  Country X's government investigates and finds that Country Y's shrimp producers are receiving significant subsidies, allowing them to sell shrimp abroad at artificially low prices, a form of dumping. To protect its own shrimp industry from this unfair competition, Country X implements an antidumping tariff on frozen shrimp imported from Country Y, raising their price to a level that reflects fair market value.

• Example 3: Ceramic Tiles

  Manufacturers of ceramic tiles in Country Z report that imported ceramic tiles from Country W are flooding the market at prices that are significantly lower than the production costs for Country W's own manufacturers, and also lower than the prices Country W charges its own domestic customers. This practice is causing severe financial strain on Country Z's tile industry.

  Following a thorough investigation, Country Z's trade authorities determine that Country W's tile producers are engaging in dumping. To counteract this unfair trade practice and safeguard its domestic ceramic tile industry, Country Z's government imposes an antidumping tariff on ceramic tiles originating from Country W. This tariff adds a cost to the imported tiles, aiming to restore fair competition in the market.