@China/Japan Comparisons: It's important to remember that the success of Japanese industry in the past is not purely down to cheap labour costs (though they certainly helped). It was much more due to the fact that certain Japanese companies had developed much extremely efficient production methods. As an example from a book I'm reading, in 1989 European cars on average required ~36 man hours to be assembled. In the US, where companies were already copying the Japanese, it was 24. In Japan? 16.
The reason Japanese companies kicked ass at producing cars was simply because
they were much better at producing cars then any of their competitors. There method of manufacturing is well known as "
lean manufacturing".
As for China, I don't know how their factories compare to others, and how much of their cheapness is purely down to wages. But if the success of their industry is purely down to wages, then long term they're doomed. Other countries that have relied on cheap wages usually end out with shoddy products and bust companies, ultimately. This happened to Korea in the 80s, and they shaped up and started copying Japanese production methods. Whether it will happen in China is another matter.
@Free Trade: Protectionism has 2 very bad consequences for the country where it's implemented:
1. It harms consumers in that country as a whole. Everyone has to pay more for the tariffed goods.
2. It preserves innefficient companies and industries, and prevents them from being exposed to outside influences, which otherwise might lead them to innovate and be internationally competitive themselves. Industries in protectionist countries are doomed to never see their products sold in the wider world, because they're just not good, or too expensive compared to better foreign products.
It can keep those companies alive in the short term, but ultimately they'll only fall further behind.
Not only that, but Free Trade does not necessarily mean that companies industry will leak out from the country. All else being equal, local production is
always more efficient then distant production. There's less shipping costs, less items in transit (tying up capital), less inventories required. It's only when other countries are anti-competitive (say by enacting subsidies) that this balance is messed up. In that case it's right for the countries to enact tariffs to redress that balance.
So to go to the NYC subway example. It's entirely likely that if NYC gave Kawasaki a long term contract, Kawasaki would not have in the long term shipped all the trains and maintenance parts from Japan. They would have set up local production in order to make these savings. But with tariffs(or worse, import limits), they're less likely to even bother to bid on US contracts, as setting up shop in america will be much more expensive and difficult, as they won't be able to rely on supplies from Japan while they're gearing up New York operations.
So ultimately, under protectionism NYC is more likely to end out with inferior, more expensive American trains, NYC may be robbed of a potential new industry (Japanese style train manufacturing), and the people of New York have to put up with more taxes and a worse subway system.
Now there are times when protectionism
is necessary, but those times, in my opinion, are very rare.