Dumping

Dumping refers to the act of selling goods in a foreign market at a price lower than their production cost or lower than the price charged in the exporter's domestic market. This practice is often undertaken to gain market share, eliminate competition, or dispose of surplus inventory. It can have significant consequences for the importing country, potentially harming domestic industries and leading to job losses. Governments often implement anti-dumping measures, such as tariffs or duties, to protect their domestic producers from unfair trade practices. The intent is to discourage these practices and regulate international trade fairly.

Dumping meaning with examples

• The European Union accused the Chinese steel manufacturers of dumping subsidized steel products onto the European market, harming domestic steel producers. Anti-dumping duties were imposed to counteract this unfair trade practice. The dumped products were sold at incredibly low prices. The EU investigation revealed that Chinese steel firms benefited from government subsidies, enabling them to engage in price dumping.
• During the economic recession, several companies faced overstocked inventory and had little choice but to engage in dumping of electronic goods overseas. Although this helped them to reduce their losses, it infuriated other competitors. The act of dumping was aimed to clear out warehouses. Ultimately, the effects of this dumping had effects on the international market, leading to global concerns.
• The agricultural sector often faces accusations of dumping when surplus crops are sold at prices below production costs in foreign countries. This practice can devastate local farmers who are unable to compete with the artificially low prices. The foreign market can become dependent on the dumped goods. Countries often negotiate trade agreements to address agricultural dumping concerns.
• In a bid to quickly capture market share, a new technology firm was caught dumping its innovative, yet less expensive, tablets at an incredibly low price. This raised eyebrows in the industry. The price dumping was done even before the product’s release and other manufacturers were already on the verge of economic failure as the technology became rapidly adopted by consumers.