If a foreign government subsidizes its manufacturers’ exports, does our government have the right to impose tariffs on imports from that country?
Suppose our country, Freetradia, which imposes no tariffs, has a thriving industry making and selling widgets worldwide at free-market prices. All of a sudden the government of another country, Exportia, begins subsidizing its own widget manufacturers, enabling them to profitably sell their widgets for substantially less than what the price would be without those subsidies. Does the government of Freetradia have the right to impose tariffs or other restrictions on imports of widgets from Exportia, in order to neutralize the competitive advantage that Exportia’s manufacturers now enjoy as a result of their government’s subsidy?
