Competition between nations is a marketplace, and that is why we desire free trade - so that we can take advantage of comparative advantage and incentivize nations to do what they are best at in terms of what the web of world goods needs and what we all collectively value.
Take American Dairy. If it is true that Americans can outcompete Canadians in milk, it makes sense for both countries if Canadians buy American milk. This then frees up Canadians to do more of whatever Canada does best, and the entire global marketplace benefits from the added efficiency.
The problem, as always, is that this process naturally creates winners and losers, and quite often the losers have considerable political power. So they use their skills at influencing government to tilt the playing field away from their competitors. They sell the public on it using populist arguments and appeals to patriotism or the ‘common good’.
Overproduction is not the result of the market - it is the inevitable result of government interference in the market through subsidies, fixed prices, quotas, tariffs, and regulations. You don’t see persistent overproduction in the vast majority of mostly unregulated markets. When prices are free to float, markets clear.
Unfortunately, trade is an issue which is hellishly complex, because the economy is hellishly complex. For example, if my country has subsidized health care and yours doesn’t, doesn’t that in effect subsidize our companies, which can now out-compete yours? Should I face a tariff to ‘level the playing field’ because companies in my country have cheaper electricity than yours because of government subsidy of power?
You can actually make a case for all of it, and of course for any other intrinsic differences between countries. But that’s precisely why we trade in the first place! Comparative advantage is an optimization strategy. The reason it works is because every country has advantages compared to other countries.
You can’t evaluate a single market or subsidy without considering why it was put in place in the first place, as it may have been a reaction to some other imbalance. But better still, we should all just drop tariffs and let the chips fall where they may. If Americans want to subsidize Canadian milk, let them. Milk producers won’t like it, but poor people sure will. As will the other industries that sell Canadians more things with the money they saved on milk.