And what says that B & C’s industries don’t grow just the same? Maybe they start industry W. You are being entirely too vague and simplistic. If you take capital from the people you’ve distorted their ability to invest, to purchase, etc. You pump that into industry X. Y and Z obviously won’t loose what X gained. You have no idea how directly it will effect them. What you do know is that the reduction in ability of consumers and entrepreneurs to invest in what they wish has been diminished, perhaps to the point where they can’t substitute for another venture, or can’t afford the risk, or can’t make a return worth the overhead. Therefore there is a loss of potential wealth. In addition. Market signals are screwed up leading to malinvestments and greater wastes of capital. Lets not forget that protectionist actions such as the subsidy come bundled almost always with tariffs and duties, regulations, money manipulation, etc. and lead to even greater economic distortions.

Are you’re assuming that every subsidy is a “mal-vestment”?

How could it not be? If the industry/product you subsidize was worth it you wouldn’t need the subsidy. People would be freely purchasing it at the face, natural cost. Even if you said that the exact amount extracted from the people and given to the product’s cost was the same as if they had no subsidies, which is impossible, it would be a malinvestment because the taxation process would be overhead to the transmission of capital.

When is it ever non-zero?

You aren’t explaining to me what’s wrong with the scenario. Why is it bad that B & C doesn’t product X anymore? In the longer term the subsidies will stop and A will likely be worse off than B & C because they malinvested their capital. You could bring up similar scenarios where country A finds a large source of X and now has lower overhead when producing something with X. Country B likely can’t compete if transportation costs don’t make the savings a wash. Should B get out of the business or be subsidized? They should get out of the business as to subsidize it would be an inefficient usage of their capital.

You simply can’t isolate one component of the market.
Ok. Country A subsidies industry X that hurts, but doesn’t kill, their own industries Y and Z. In the meantime, everyone in industry X goes out of business in countries B and C. Sure, in those countries industries Y and Z are doing better than before, but now country A has established complete dominance of market X. Worse yet, industry X has grown 400% while Y and Z only a small fraction. The startup costs for everyone else to now re-compete in industry X is non-zero, perhaps greater than the advantage they hold in industries Y and Z.

Human Action and other works by the Austrians economists go into great detail of the costs of socialism and centralized planning. They may not be obvious in the short term or from your perspective but the total cost in terms of wealth per person is going to be higher. Such as with this Mexican price freeze. They will feel that later. The article says that the industry acknowledges there will be a negative economic result because of the freeze. They may very well end up with shortages and hording along with no incentives locally to fix the issue.