According to economic theory, export subsidies can benefit countries in very narrow situations—exceptions really. However, empirical evidence has not validated this. Yet, export subsidies are a common tool used by governments to promote exports and support domestic industries in global competition. Advocates argue that these subsidies can correct market failures, countervail other countries’ subsidies, and diversify the export base. In reality, export subsidies distort trade, maintain oligopolies, and pull resources away from more productive uses in addition to being extremely unfair to unsubsidized competitors. Capital markets efficiently allocate financing; perceived “financing gaps” reflect proper risk pricing rather than market failures requiring subsidies. This is has been true even in cases commonly understood as being evidence that export subsidies “work,” like Asian countries. While the policy response to a foreign country subsidizing its export should be to do nothing, it may be politically difficult. As an alternative, countries should challenge foreign export subsidies through the World Trade Organization dispute resolution. It has the merit of being less distortionary response than a subsidy or tariff war.