When manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production, as a way to get rid of excess product, it is called dumping.
What is dumping?
- Dumping happens when a nation or business exports a good at a cost that is less expensive in the foreign market than it is in the exporter's home market.
- The ability to flood a market with goods at prices that are frequently thought to be unfair is the main benefit of dumping.
- According to World Trade Organization (WTO) regulations, dumping is permitted unless the foreign country can conclusively demonstrate the harm the exporting company has done to its local producers.
- To prevent dumping on domestic producers, nations utilize tariffs and quotas.
- Trade dumping's main benefit is the capacity to flood the market with goods at prices that are frequently regarded as unfair.
- In order to make up for the losses experienced when the goods sell for less than what it cost to produce them, the exporting nation may provide the producer with a subsidy.
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