Insane trade policies

Apparently, President Obama is suing in the World Trade Court because the People's Republic of China is said to be subsidizing auto parts sold in the United States--to the tune of about one billion dollars annually.  Now, I'm guessing here that the subsidies aren't simple payments to parts makers "here, sell it in Iowa and we'll chip in a hundred grand", but are rather fairly complicated tax provisions that took a few good accountants fluent in Mandarin a few months to decipher.

Whether that's true or not, let's take a look at the numbers.  Given that hundreds of billions of dollars worth of automobiles are sold each year in this country, and that the over hundred million vehicles on the road need a lot of parts to keep them going, I'm guessing that the 10% market share held by Chinese vendors is tens of billions of dollars. The subsidy is really less than 5% of the wholesale value, more or less, and we're risking a trade war because the Chinese government apparently wishes to help us pay for our auto parts.

Now if we had a sane tax and trade policy, we would realize that no government, no matter how stupid or generous to us, can go on subsidizing exports indefinitely, and therefore our best course of action is simply to tax trade according to what it costs us to keep sea lanes open (Navy, Coast Guard, and border control costs) while dropping income taxes accordingly.  Good luck getting anywhere with either party with what the Founding Fathers would have told us, though.