The United States government givesto some industries in the form of direct payments or loans. As a result, producers can sell these products at aprice while still making a profit. If the government wants to discourage consumers from purchasing imported goods, acan be created to tax imports.

Subsidy is any form of concession, usually made by the government to certain activities or industries. These concessions may be in the form of monetary support or via legislative benefits to foster development. For example, a government may grant a subsidy to the computer industry to reduce the final price of consumer products. This allowance may occur by exempting or reducing fees and taxes for a certain period until specific objectives are achieved.

In developed countries such as the US, it is common for governments to subsidize certain activities to make local products more competitive than imported ones made in developing countries.

The opposite can also happen, in which case the government may discourage the purchase of an imported product by creating taxation on imports. This makes the importing product more expensive, making its price get higher, as you can purchase this product will be discouraged.