Understanding by Gert Aldman

What is “Dumping” in international trade?

Country A: Country A makes an Elsa doll for $10. It sells the doll in its own market at $12. Country A wants to expand its business. It decides to go to Country B.


Country B: The children in Country B also like Elsa dolls. It costs $9 for the local manufacturers in Country B to make one and they sell it for $11.


Country A decides to sell the doll for $10.5 in Country B to compete with the local manufactures. This gives an unfair advantage to Country A as consumers love lower prices. The local manufacturers in Country A suffer losses as their product is not desirable anymore. This is dumping.

An international price discrimination where a product is sold in the importing country at a lower price than the exporting country is called dumping. Anti-dumping duty is the tariff (tax) imposed on imported goods which are priced below the fair market value.

If a foreign country can prove the negative impact that the lower priced exported goods has had on its local market, it can levy anti-dumping duty to protect local producers and ensure fair trade.