What The Government Wishes You Didn’t Know About Antidumping Laws

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Daniel J. Ikenson, director of Center for Trade Policy Studies, has written multiple times on the ill effects of trade restrictions, most recently the ill effects of anti-dumping laws. He with the CATO Institute produced the following video on how US antidumping laws are killing American jobs.

Many of the necessary ingredients for US production are imported. These intermediate goods help create final products and typically account for more than half of the value of all imports in the Untied States. That means that of all the stuff that America buys from abroad more than half goes into products that Americans make. When low prices of these imports squeeze the profits of American suppliers, foreign competitors are often accused of “dumping” their products in US markets. Anti-dumping rules are supposed to protect domestic producers and domestic jobs from unscrupulous foreign competition. But access to these inputs at lower costs means lower prices for consumers. Anti-dumping rules raise prices for their consumers and producers, shrink profits, and reduce the capacity of firms to invest, expand, and hire more workers.

In Ikenson’s 2011 article, “Protection Made to Order,” he claims that “the U.S. antidumping apparatus… transformed from one predicated on protecting consumers and preserving competition into a tool that suppresses competition in the name of remedying ‘injury’ done to domestic producers. …No longer are anti-competitive or predatory pricing practices the law’s target. Instead, the target is foreign competition writ large, and, as such, antidumping practice routinely punishes normal, healthy competition at great cost to the broader economy.”

Antidumping laws, which have always been an economic evil, are now being used to suppress foreign competition, a silent economic murder that the government has largely managed to hide in its closet. As Ikenson continues in a recent 2013 article titled “Is Extortion the Main Purpose of the Antidumping Law?“:

Sold by its supporters through an unquestioning media to a gullible public as a tool necessary to protect upstanding American producers and their workers from the ravages of predatory foreigners hell-bent on stealing the U.S. market, the antidumping law escapes the scrutiny it deserves. By encouraging price fixing and other forms of collusion among domestic suppliers and between domestic and foreign suppliers, the antidumping law victimizes U.S. consumers and downstream U.S. firms under the guise of promoting “fair trade.”

But the only fair trade is free trade, as Walter E. Williams of Townhall explains in his article “Free or Fair?

If you want to learn more, CATO hosted a three and a half hour conference on US antidumping, that can be listened to here and we have a whole series on free trade and trade restrictions here on Marotta On Money.

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Megan Russell has worked with Marotta Wealth Management since 2005. She loves to find ways to make the complexities of financial planning accessible to everyone. Her most popular post: The Complete Guide to Your Washing Machine