According to the US International Trade Commission, seven foreign countries showed evidence of dumping hot rolled steel imports into the United States market. As reported by Reuters, the USITC found reasonable evidence that the domestic US steel industry was damaged by the imported steel being sold at a basement price. The seven countries under investigation include Australia, Japan, the Netherlands, the UK, Brazil, South Korea and Turkey. Due to the indication of dumping, the Federal Commerce Department will look into whether or not the countries will receive import duties on their steel trade.
Dumping is a type of aggressive pricing policy often found in international markets. The current incident involving steel provides a textbook example, as the steel is sold by the foreign company at a much lower price than the common rate of the home country, damaging overall sales and business for the domestic industry. In extreme cases, the product is sold below cost as a way to prey on the domestic business, however in this instance that does not look to be the case according to the USITC. Hot rolled steel products in particular are a target for price dumping, as they are one of the least expensive items in the field. Hot rolled steel is a common type of carbon steel, the other type being cold rolled. Cold rolled steel provides better overall tolerance and finishing qualities to hot rolled steel, allowing it to be produced in nearly any type of gauge but is often more available in thinner gauges to its hot rolled counterpart. Cold rolled steel is sold at a higher price than hot rolled and the costs are harder to manipulate by predatory pricing.
Import duties created by the federal government are the standard response to price dumping – the duties would raise the price of the imported goods, protecting the domestic industry and creating revenue for the government. However, such duties could also hurt the relationship with the targeted country, causing friction in future dealings in all businesses with the foreign nation, not just in the one industry. A private company from the foreign nation could be responsible for the dumping without the rest of the country being aware. That is why warnings and cautions are used by the government ahead of any duties, allowing companies to correct their actions before more serious sanctions are created. Ideally, with the announcement form the USTIC, the countries involved will reduce the amount of unfairly priced goods on the market and return balance to the industry.