An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. Dumping is a process where a company exports a product at a price lower than the price it normally charges in its own home market. For protection, many countries impose stiff duties on products they believe are being dumped in their national market, undercutting local businesses and markets.A country prevents dumping through trade agreements. If both partners stick to the agreement, they can compete fairly and avoid it. Trade agreements don’t prevent dumping with countries outside of the treaties. That’s when countries take more extreme measures. Anti-dumping duties or tariffs remove the main advantage of dumping. A country can add an extra duty, or tax, on imports of goods that it considers to be involved in dumping.
If that country is a member of the WTO or EU, it must prove that dumping existed before slapping on the duties. These organizations want to make sure that countries don’t use
anti-dumping tariffs as a way to sneak in trade protectionism.