Subsidies and countervailing measures are crucial topics in international trade, as unreasonable subsidies and misuse of countervailing measures can distort international trade relations. The U.S. government has employed various methods such as preferential loans, investment incentives, research support, and trade finance to subsidize its industries, aiming to enhance its economic competitiveness. In recent years, the U.S. has intensified its industrial subsidy efforts with more flexible approaches, resulting in increased potential harm. The U.S. government’s practices of“import substitution subsidies”and“export subsidies”blatantly violate WTO rules, and does harms to trading partners’ interests. Utilizing a bilateral Cournot competition model, our analysis reveals that U.S. subsidies directed at industries (enterprises) in competition with imports not only impact firms’ output and enhance U.S.competitiveness at the micro-level, but also can improve overall U.S. welfare at the macro-level, while worsening the welfare of trading partners simultaneously. The U.S. export subsidies increase the profits of U.S. export enterprises and national welfare, while decreasing the profits of trading partner enterprises, with uncertain effects on the overall welfare of trading partners. Based on the analysis of the characteristics and effects of U.S. industrial subsidies, Chinese government should further optimize industrial subsidy strategies, enhance the execution capability of countervailing trade remedy measures, and promote international cooperation to safeguard China’s legitimate trade interests.