To examine this, let’s look at a simple hypothetical example. Imagine that France levies a tariff against the U.S. blue jean industry. The means French citizens pay a tax to the French government when they purchase American jeans. This is clearly a penalty to French consumers, who must pay an artificially increased price for their purchase.

The protectionist will immediately look to the effects on the American company. The marginal consumer in France will see the price increase and decide whether to purchase the jeans. If the price change from the French tax is large enough, the consumer will not buy the jeans. The American company misses out on this consumer because the French government chose to punish its citizens with taxes.

The American company is not guaranteed a market, however. No consumer owes her business to any company or industry, and in a market, the two sides must reach a mutually beneficial arrangement. It is clear that the foreign government hindered the quantity demanded of an American product. It is not clear that a governmental response is required.