Dumping also occurs when a foreign producer can sell in the U.S. market at a price below its cost of production for a sustained period of time. Dumping is caused by closed foreign markets, foreign monopolies, and government mercantilist policies that promote and subsidize excess capacity. A subsidy is a form of government financial assistance provided to a company that is made on terms inconsistent with commercial considerations. Subsidies are provided by governments to achieve commercial objectives that otherwise would not occur. They distort private market actions and undermine genuine comparative advantage, upon which free trade is based.
Cartels are private restraints of trade and other forms of coordinated, anticompetitive behavior.
World steel trade is highly restricted by national and international cartels. A typical steel cartel functions by limiting the availability of steel in a particular market through restraints on production and sales. Foreign steel cartels have prevented market forces from eliminating excess capacity in restricted markets, which in turn has led to dumping.