DEFINITION of 'Dumping'

In international trade, the export by a country or company of a product at a price that is lower in the foreign market than the price charged in the domestic market. As dumping usually involves substantial export volumes of the product, it often has the effect of endangering the financial viability of manufacturers or producers of the product in the importing nation. Dumping is also a colloquial term that refers to the act of offloading a stock with little regard for its price.


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While the World Trade Organization reserves judgment on whether dumping is unfair competition, most nations profess to be against the practice. Dumping is legal under World Trade Organization rules unless the foreign country can reliably show the negative effects of the exporting firm on the domestic producers. In order to counter dumping, most nations use tariffs and quotas to protect their domestic industry from the negative effects of predatory pricing.

In an increasingly global economy, consumers in a nation that has been the target of dumping activity may have few qualms about consuming products that have been dumped, as long as they are of comparable quality to local merchandise but are priced much lower. Over time, dumping may have a negative impact on the local economy by driving domestic producers out of business, which would result in job losses and a higher rate of unemployment.

  1. Tariff

    A tax imposed on imported goods and services. Tariffs are used ...
  2. Anti-Dumping Duty

    A protectionist tariff that a domestic government imposes on ...
  3. World Trade Organization - WTO

    An international organization dealing with the global rules of ...
  4. Protectionism

    Government actions and policies that restrict or restrain international ...
  5. Export

    A function of international trade whereby goods produced in one ...
  6. Quota

    A government-imposed trade restriction that limits the number, ...
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