terms of trade,
which are our prices relative to foreign prices.
Positive impact on Terms of trade
When a government imposes a tariff on imports, the importing companies presumably lower their prices, so that, with the tariff, they are still competitive.
The gain depends on the tariff-imposing countries ability to drive down foreign export prices. If the country is big, and is able to drive down world export prices, then everyone benefits around the world, and we say that a tariff had a positive effect by improving our "terms of trade". Note that importers can then import products at a lower price.
The foreigners who are importing into our market are lowering their prices, making our terms of trade improve. (The foreigners price+tariff does not decline, but the price net of tariff is lowered by those companies, so they can stay competitive in our market.)
Negative impact on Terms of trade
If a government offers an export subsidy to its local companies, then they will sell at home at a slightly higher price, and abroad at a slightly lower price. When a government subsidizes its own exporters, then they should sell overseas at a lower price than otherwise. This hurts the terms of trade, which are our prices relative to foreign prices. Our local prices are now high, compared to what we sell abroad for.
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