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The U.S. consumer electronics industry was once a world leader, but despite strong growth in U.S. and global consumption of consumer electronics, the U.S. industry is now a shadow of its former self. Why is the United States such a minor player in consumer electronics when factor endowments imply a stronger presence? A major reason is that the United States government inadequately enforced its laws against dumping - the sale of goods at less than their price in the home market.
Today, domestic critics are aiming to weaken those same antidumping measures. Likewise, Japan and other frequent targets of U.S. unfair trade laws also are seeking to negotiate limits on those laws during the next round of multilateral trade talks. For those reasons, the story of the U.S. consumer electronics industry remains particularly relevant. The fall of that industry usefully illustrates the impact that market distortions can have on other U.S. industries if unfair trade laws are substantially weakened.
This study explores the lessons offered by the U.S. consumer electronics industry and demonstrates that dumping, far from being a short-term phenomenon, can have long-lasting economic consequences.