Others argue that the goal of free trade is to promote competition on the basis of a comparative advantage that maximizes global efficiency. Practices such as subsidies or monetary manipulation are an abandonment of this competition and can lead to an outcome in which the less efficient producer dominates trade and thus reduces overall well-being. In these circumstances, a countervailing measure, such as the establishment of a countervailing duty, could restore a « level playing field » in which a trade can be made on the basis of comparative advantages. [15] A second model, commonly used, is a gravity model that assumes that large economies have a greater impact on trade flows than small economies, and that proximity is an important factor influencing trade flows. And another common type is a partial equilibrium model that assesses the impact of a trade policy measure on a given sector and not on the general economy. Partial balance models do not cover connections with other sectors and are therefore useful when the ripple effects are likely to be negligible. However, partial equilibrium models are more transparent than CGE models and it is easier to identify the effects of modified assumptions. China has comparable trade surpluses. However, China has linked the renminbi to the dollar, preventing its exchange rate from rising and thus restoring a trade balance. China does this by using the dollars it accumulates from its trade surplus to aggressively buy U.S. currency in the form of treasury bills.

The result was an overvalued dollar and an undervalued renminbi. (This is similar to what Japan did in the early 1980s, when the yen was undervalued and the dollar was overvalued.) In economic theory, « an undervalued exchange rate is both an import tax and an export subsidy, and therefore the mercantilist policy that one can imagine. » [32] They occur when one country imposes trade restrictions and no other country responds. A country can also unilaterally relax trade restrictions, but this rarely happens. This would penalize the country with a competitive disadvantage. The United States and other developed countries do so only as a kind of foreign aid to help emerging countries strengthen strategic industries that are too small to be a threat. It helps the economies of emerging countries to develop and creates new markets for U.S. exporters. [20] Viner sees a restriction on the rule that global prosperity is reduced when trade diversion is more important than trade creation, and that is when unit costs fall in a sector, when production is expanding.