Anti-dumping duty is a protectionist tariff that a government imposes on imported goods that are priced below the fair market value or less than the cost of production in their home country. The primary purpose of anti-dumping duties is to protect domestic industries from unfair competition posed by imports sold at significantly lower prices, often referred to as “dumping.”

Dumping occurs when foreign companies export their products to another country at prices lower than the prices they charge in their domestic market or lower than the cost of production. This practice can lead to market distortions and harm the competitiveness of domestic industries.

Key features of anti-dumping duties include:

1. **Investigation Process:**
– Before imposing anti-dumping duties, the importing country typically conducts an investigation to determine if dumping is occurring and if it is causing injury to the domestic industry. The investigation considers factors such as the pricing practices of the exporting country, the impact on domestic industries, and whether the dumped imports are affecting the domestic industry’s pricing, market share, and profitability.

2. **Imposition of Duties:**
– If the investigation concludes that dumping is occurring and is causing injury to the domestic industry, the government may impose anti-dumping duties on the specific imported products. These duties are intended to bring the import prices up to fair market value and prevent further harm to domestic industries.

3. **Duration and Review:**
– Anti-dumping duties are not necessarily permanent. They are often imposed for a specified period and are subject to review. The importing country may conduct periodic reviews to reassess the need for the duties based on changes in market conditions.

4. **Calculation of Duties:**
– The amount of the anti-dumping duty is determined by calculating the margin of dumping, which is the difference between the export price and the normal value (fair market value or cost of production). The duty is then applied to this margin.

The imposition of anti-dumping duties is a controversial and debated topic in international trade. While they are intended to protect domestic industries, critics argue that they can lead to higher prices for consumers and limit the benefits of free trade. International trade agreements, such as those established by the World Trade Organization (WTO), provide guidelines and disciplines on the use of anti-dumping measures to ensure they are not used as a tool for protectionism without justification.