Dumping, duties and disruption: how Australian businesses can protect themselves

Among the many trade challenges facing Australian businesses this year is the increase in anti-dumping and safeguards investigations and imposition of new duties on imports. Escalating geopolitical tensions, the realignment of manufacturing supply chains and the forecasted metal manufacturing surplus in Asia are all likely to contribute to a spate of investigations.

This particularly impacts businesses in the steel, aluminium, chemicals, paper and renewables products sectors, which have historically been the subject of anti-dumping investigations. Manufacturers of these products will be considering whether foreign imports are increasing in volume or decreasing in price, and whether this impacts their ability to compete in the market. Businesses in the mining, construction and manufacturing sectors that are importing these products and therefore benefitting from increased choices or lower prices, will be keen to ensure new duties are not imposed on these goods at the border, thereby increasing the cost of those inputs.

The below answers common questions that arise in relation to dumping, its impact and regulatory response and what Australian businesses can do to protect themselves and seize the opportunities.

What is dumping?

Dumping occurs when a foreign producer exports goods into another country at prices lower than their ‘normal value’ – typically the price charged in their home market or below the calculated cost of production. This can distort competition, undercut domestic manufacturers and contribute to job losses or long-term damage to local industry.

Selling goods at lower prices is not per se prohibited; it is normal competitive and commercial activity. It becomes dumping, and prohibited by the WTO agreements, free trade agreements and domestic laws implementing those agreements, if it causes or threatens material injury to an importing country’s domestic industry. That is, if it causes injury beyond what would be expected in the ordinary course of business.

What are anti-dumping measures?

Anti-dumping measures are trade remedies used by governments to address the harmful effects of dumping. They are typically imposed after an investigation confirms that imports are being dumped and causing material injury to local manufacturers, by examining economic factors such as production levels, market share, profits and stock volumes. They usually take the form of additional duties imposed on the imports at the border, with the aim of restoring fair market conditions in the domestic market.

In Australia, these measures are imposed by the Minister for Industry on the recommendation of the Anti-Dumping Commissioner.

Anti-dumping measures are a challenging policy tool for governments to navigate. On the one hand, they are a cost-efficient regulatory tool to help shield domestic industries from unfair competition in an increasingly tactical global trade policy landscape. On the other hand, they increase the cost of imports for Australia’s mining, construction, and manufacturing industries.

Will more dumping duties be imposed on imports into Australia?

We are likely to see more dumping duties imposed in Australia. Anti-dumping investigations and measures traditionally increase during periods of economic downturn. For example, there were sharp increases in the number of investigations and duties imposed during the Global Financial Crisis and during the COVID-19 pandemic.

The recent wave of US tariffs, particularly on Chinese electric vehicles, batteries, and clean energy inputs, is expected to divert exports away from the US and into third markets such as Australia, Southeast Asia and Latin America. Countries like Australia that remain open markets are particularly exposed to these redirected flows. Australia risks becoming both a transit route and replacement destination.

This is likely to trigger import surges in vulnerable sectors like metals, chemicals and renewable energy components. In turn, this may prompt local producers to request that the Anti-Dumping Commissioner commence:

• dumping investigations to explore whether these imports have been priced below the cost of production in order to predatorily price out competitor Australian domestic products; or
  
  
• safeguards investigations to protect the domestic industry against an altogether new stream of imports.

Anti-dumping investigations have already increased in Australia this year, with several significant investigations targeting imports from China, South Korea and Thailand, among others. These investigations primarily concern products in the aluminium and steel sectors, where surplus capacity and redirected exports have already placed pressure on Australian manufacturers.

Are Australian exporters to China and the US likely to face new dumping duties?

The US and China have both already had an increase in anti-dumping investigations and duties. They are predominantly focussed on imposing duties on each other, but Australian exporters may be impacted. In the first instance, the risk of dumping duties is a particular risk for Australian companies that rely on imports from China, export commodities to China or the US, or manufacture in the US for export to China.

But indirectly, anti-dumping duties are likely to flow through to broader supply chain and price disruptions. For example, duties imposed by the US and China on each other’s semi-conductors and other tech goods are also likely to flow through the manufacturing supply chain to increase prices on end use products generally.

Looking ahead – what should Australian companies do?

Australian businesses should act early to protect their interests and strategic priorities. Various steps can be taken, including:

• Monitoring trade remedy developments in the US, China and Australia to anticipate spillover effects;
  
  
• Reviewing sourcing and supply chain configurations, including country of origin and pricing;
  
  
• Engaging early with the Anti-Dumping Commission if a sector they rely upon is under scrutiny;
  
  
• Maintaining robust documentation for imports in preparation for potential investigations; and
  
  
• Using legal and government engagement channels, especially in strategically sensitive sectors (e.g. energy transition materials).

As anti-dumping measures become a more prominent feature of the trade landscape, Australian companies would be well-advised to prepare for anti-dumping investigations and to seek advice on how to navigate them to ensure they work in their commercial favour.