Two Foreign Nations Decided to Impose Tariffs on Imports from All

Multiple Choice

Two foreign nations decided to impose tariffs on imports from all countries. They set up a free trade area, removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Country A now begins to import sugar from Country B. Prior to this, Country A was producing sugar at a higher cost so it now benefits from this transaction. This is an example of

A) trade creation.
B) strategic pricing.
C) synergy.
D) trade diversion.
E) protectionism.