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?
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I would also point out that initially, the entire revenue of the Federal (for some reason my fingers kept wanting to type Deferral...) government was derived from trade tariffs. If we want to get rid of corporate and personal income taxes, we need to go back to this model.
The other thing that happens, though, is that the Freedraidia widget company moves to Exportia and can make more money with the subsidies selling back to it's Freetradia citizens.
Unfortunately, while widgets are cheaper the citizens of Freetradia don't have jobs since the widget factory closed and they can't afford to buy widgets. The widget company is doing really well, though and its stock is trading at high levels.
At whose cost?
This is a very intriguing question that possible dictator Trump may make not so hypothetical.