What does dumping potentially lead to in international markets?

Dumping, which refers to the practice of a company exporting a product at a price lower than the price it normally charges in its own domestic market, can lead to increased tariffs on imports as a primary consequence. When a country identifies that a foreign company is engaging in dumping, it may impose tariffs to protect its domestic industries from unfair competition. These tariffs make the dumped goods less competitive, helping local businesses maintain their pricing and market share.

Additionally, when domestic industries are threatened by these low-priced imports, governments may feel the need to step in and level the playing field. Increased tariffs serve as a protective measure, aiming to ensure that local businesses have a fighting chance against unfair pricing that could disrupt local economies and job markets. By imposing such tariffs, governments can discourage dumping practices and support their domestic industries.

While factors like trade imbalances, international alliances, and consumer prices are also relevant in the broader context of international trade, the immediate consequence of dumping leading to heightened tariffs encompasses a direct response from governments aiming to safeguard their local economies.