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Should we worry if foreigners sell us goods cheaply?

Updated: 10/26/2022
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Zeezhammadi

Lvl 1
10y ago

Best Answer

You should always worry a little when foreigners or anyone is selling you goods cheaply. There are two reasons for this and both can be economically harmful.

1) The producing country is subsidizing their industries, which is called "dumping goods" -- if they drive other companies out of business, it increases the possibility of future price increases due to decreased competition.

2) The dependence on foreign goods affects the balance of payments between countries -- this has implications for currency exchange, and can increase inflation as more currency is put into circulation. For the US, the continuing trade imbalance with China has allowed China to buy US and international companies with their excess dollars.

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