Respuesta :
Producing those things is less expensive thanks to subsidies than it is for export. Because of this, domestic prices are reduced. Tariffs and subsidies both increase the cost of imported items in comparison to native goods, which lowers imports.
Which is preferable, subsidies or tariffs?
Abstract. In the absence of distortions or policy objectives directly related to trade, it is a well-established tenet of trade theory that subsidies are preferable to tariffs for attaining any economic or non-economic aim.
How do governments profit from tariffs and subsidies?
In this situation, a government may decide to directly subsidize the industry in question or impose a tariff on competitive imports. By increasing the domestic price of imports, a tariff would also enable the output price of the protected industry to increase to the same level.
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