Question

In international trade, when we say that Brazil is “dumping” in the United States, this is indicating that:

Answer 1

Brazil has been providing a large amount of steel to United States and this act is referred to 'dumping'.

Answer 2

Answer:

Dumping implies the sale of goods and services at artificially low prices. Dumping prices are significantly lower than market prices, and sometimes even lower than the cost of production of those goods or services. Dumping is carried out for various purposes: penetration or strengthening in a new market, or for crowding out competitors.

Dumping is carried out by the state and / or companies with the expectation of reimbursing current losses in the future when the desired market position is achieved through dumping. However, quite often both firms and the state resort to dumping as a one-time event: they monetize stocks and sell illiquid products; in case of acute and urgent need for cash, when there is a threat of greater losses than losses during dumping. In some countries, dumping is considered a negative phenomenon and is fought it by applying anti-dumping laws.