You have heard it said “free trade only works when it is fair trade, and when foreign companies get subsidies from their governments, they aren’t trading fairly. Therefore, we must punish these cheaters with tariffs and other restrictions.”

But I answer that we should not punish these “cheaters.” If anything, we should thank them—and if anyone is made worse off by the subsidies, it is the taxpayers in the countries that are doing the taxing and the subsidizing. Americans, on net, are better off because we get more stuff for the sweat of our brows.

Imagine the Chinese government was to try to Make China Great Again by subsidizing steel producers. Subsidized Chinese producers can now undercut American steel producers, so American steel producers go out of business and the workers starve to death. Right?

Wrong. No doubt, the subsidies will make life harder for American steelworkers who now find themselves out of a job. Some people may not recover the standards of living to which they have become accustomed. This doesn’t mean the subsidy has made Americans worse off overall. By subsidizing steel producers, the Chinese government lowers costs for people who use steel—which is to say just about everyone, and especially American consumers of electronics, home appliances, cars, structural steel, cookware, residential construction, commercial construction, heavy equipment, staples, paperclips...you name it. The American steel industry contracts because of artificially cheap foreign steel, but other American industries (construction and food service, for example) expand. To use just one example, cheaper steel means cheaper waffle irons. Cheaper waffle irons mean more Waffle Houses. More Waffle Houses means more waffles and greater convenience for the average American and more job opportunities at Waffle House.

Or consider construction. Cheaper steel makes bridges and especially commercial construction more affordable. The result is better infrastructure and more opportunities in the construction industry.

Or consider cars. If we can import steel at lower prices, car factories in Alabama (like the Mercedes, Honda, and Hyundai plants) can crank out more cars.

The big winners are American consumers, not foreigners as a whole. The losers, paradoxically, are not American workers but foreign taxpayers. Distributionally, the effect of such subsidies is perverse. Subsidies to steel manufacturers in China tax the relatively poor Chinese in order to buy nice things for relatively wealthy Americans and Europeans. If the Chinese government is doing anything blameworthy—and make no mistake, it is—it is being blameworthy by robbing the poor to subsidize the rich.