A) If the Home country subsidize its exports and Foreign impose a countervailing tariff which offsets the subsidy's effect, so that in the end, and the relative prices in Foreign are unchanged, it will increases the relative price of the cloth, the terms of trade and the welfare of the two countries, due to the effect of the countervailing taxes as these tariffs concerned to the specific type of government duty which is imposes by one country in order to protect the domestic producers by countering the negative affects of import subsidies, it is an import tax by the importing country on imported products