International trade is beneficial for businesses, consumers, and governments alike, but when exporters take advantage of price differences between countries and sell their products at drastically lower prices, this is unfair competition that harms international trade. Most countries disapprove of the practice, and the U.S. government does what it can to protect domestic businesses from foreign competition and harmful dumping activities.
This blog will look at what anti-dumping is, how it affects exporters that regularly ship from the United States to Canada or Mexico, and how Sheer Logistics addresses these international shipping challenges for our clients.
What Is Anti-Dumping in International Trade?
Some countries work together to establish anti-dumping agreements between trade partners. Typically, countries discourage dumping by imposing tariffs and import taxes on international trade.
Dumping imports is when an exporter sells a product in a foreign country at a price that’s drastically lower than in their home country. An exporting business will flood an importing country’s market with low prices to gain a competitive advantage or even put domestic suppliers out of business.
It can be hard to identify a trade practice as dumping because determining the value of a product is not a straightforward process. Market value domestically is the acceptable price in the exporting country, while the export price is the appropriate domestic price in the importing country. The difference between the two values is supposed to indicate dumping.
How Do Anti-Dumping and Countervailing Duties Affect Exporters?
Foreign governments subsidize industries through direct cash payments, credits against taxes, and loans to combat dumping. The amount of subsidies that a foreign producer receives from its government is the basis for the rate by which the subsidy is offset or countervailed through higher import duties.
If a country is a member of the World Trade Organization (WTO), it can bring formal complaints against both dumping and unfair protectionist trade measures.
What U.S. Importers Need To Know About Anti-Dumping Laws Before Shipping Internationally
Export Sales Made at a Profit Can Still Be Dumped
In the U.S., dumping is determined by comparing the adjusted U.S. price of the import to a foreign market value. This means a foreign product sold to an importer at above cost and for a profit can still be found to have been dumped if the U.S. price was lower than the adjusted price in the comparison home market.
U.S. Importers Are Responsible for All AD/CVD Deposits and Assessments on Imported Goods
Also, any AD/CVD deposits made at the time of entry may not represent the total amount of duties that are owed.
It Pays To Understand Your Entire Supply Chain
This concept is important for businesses that only ship domestically, but it is critical for any company that exports or imports, especially if their industry includes products that could be subject to anti-dumping/countervailing duty orders.
Do Not Rely on Foreign Producers or Importers To Assume Risk Regarding Anti-Dumping Laws
According to U.S. law, the importer assumes all risk of anti-dumping liability for every transaction. This risk may be especially high when dealing with new suppliers, new markets, and new products. Exporters may misrepresent products by classifying them under different categories, and if these classifications are wrong, the importer suffers heavy financial and supply chain consequences.
Sheer Logistics Can Help Your Business Import and Export
If AD/CVD tariffs and duties are difficult to determine, they are even more difficult to plan for. This is where Sheer can help small and medium-sized businesses import and export the products they need.
Trade regulations vary from country to country, and even routine shipments can be complex due to trade laws, customs, and border tariffs. Added complexity brings higher costs, but an experienced shipping consultant like Sheer Logistics can help you control costs and keep your goods moving across borders.
Calculating tariffs and related shipping fees should always be a part of your shipping strategy. If you’re unsure how to get products across the border, call Sheer and speak to one of our shipping experts.