What are countervailing duties intended to offset?

Countervailing duties are tariffs imposed by a government on imported goods that have been subsidized by the exporting country. The purpose of these duties is to level the playing field for domestic producers who may be disadvantaged due to the subsidies provided to foreign competitors. When a government provides financial support to its own exporters, it can lead to lower prices for their goods on the international market, which can harm local industries unable to compete at those lower prices. By applying countervailing duties, the importing country's government aims to offset the advantages gained by the subsidized products, ensuring fair competition between domestic producers and foreign producers benefiting from such subsidies.

In summary, the correct answer highlights the role of countervailing duties in addressing the distortive effects that subsidies from foreign governments can have on international trade dynamics.