Using the results from the previous exercise, consider the impact of Home imposing a tariff on Foreign exports and Foreign retaliating with a tariff on Home's exports. Assume that the MS and MD curves for both goods (Home exports to Foreign and Foreign exports to Home) are identical. Starting from a situation where Home and Foreign both impose a tariff of T, show that both unambiguously gain if both remove their tariffs, but one nation might lose if it removed its tariff unilaterally. By the way, this exercise illustrates why nations that are willing to lower their tariffs in the context of a WTO multilateral trade negotiation are often not willing to remove their tariffs unilaterally.