CHAPTER7Comparative Advantage and theGains from International TradeChapterOutlineandLearningObjectives7.1The United States in the中International Economy7.2Comparative Advantage inInternational Trade7.3How Countries Gain fromInternational Trade7.4Government Policies ThatRestrict International Trade7.5TheArgumentsoverTradePoliciesandGlobalization
1 Chapter Outline and Learning Objectives 7.1 The United States in the International Economy 7.2 Comparative Advantage in International Trade 7.3 How Countries Gain from International Trade 7.4 Government Policies That Restrict International Trade 7.5 The Arguments over Trade Policies and Globalization CHAPTER 7 CHAPTER Comparative Advantage and the Gains from International Trade
Is It Right to Save Jobs in the Tire Industry?Between 2004 and 2008, Chinese tire companies tripled exports tothe United States..In fall 2009, President Obama responded with a tariff on tireimports from China of 35% of the tire's value.. Why? This would protect U.S. tire producing firms, and fewer tireindustryworkers would losetheir jobs.China responded by raising tariffs on some U.S. goodsIn 2012, President Obama allowed the tariff to expire. Tire importsfrom China startedtoriseagainDid the tariffs in the tire industry make us better or worse off?2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 2 Is It Right to Save Jobs in the Tire Industry? Between 2004 and 2008, Chinese tire companies tripled exports to the United States. • In fall 2009, President Obama responded with a tariff on tire imports from China of 35% of the tire’s value. • Why? This would protect U.S. tire producing firms, and fewer tire industry workers would lose their jobs. China responded by raising tariffs on some U.S. goods. In 2012, President Obama allowed the tariff to expire. Tire imports from China started to rise again. Did the tariffs in the tire industry make us better or worse off?
The United Statesin the International Economy7.1LEARNINGOBJECTIVEDiscuss the role of international trade in the U.S. economy.2015PearsonEducafion.lnc
LEARNING OBJECTIVE © 2015 Pearson Education, Inc. 3 The United States in the International Economy 7.1 Discuss the role of international trade in the U.S. economy
The United Statesand International TradeInternational trade has grown more and more important to the worldeconomyoverthepast50years.Falling shipping and transportation costs have made internationaltrade moreprofitable and desirable.Traditionally, countries imposed high tariffs on imports, believingthat suchmeasured madetheir ownfirms and consumers better offBut that meant their exports were similarlytaxedTariff: A tax imposed by a government on importsImports: Goods and services bought domestically but produced inothercountries.Exports: Goods and services produced domestically but sold in othercountries.2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 4 The United States and International Trade International trade has grown more and more important to the world economy over the past 50 years. Falling shipping and transportation costs have made international trade more profitable and desirable. Traditionally, countries imposed high tariffs on imports, believing that such measured made their own firms and consumers better off. But that meant their exports were similarly taxed. Tariff: A tax imposed by a government on imports Imports: Goods and services bought domestically but produced in other countries. Exports: Goods and services produced domestically but sold in other countries
The Increasing Importance of Trade to the U.SSince 1970, bothimports andPercentageexports have beenofGDP20%steadily rising as aImportsasa18fraction of U.S.percentageofGDP16gross domestic14product (GDP).12108International tradeExportsasa6percentageofGDPhas been4becoming a more2and more0197019751980198519901995200020052010important part ofthe AmericanFigure 7.1InternationaltradeisofeconomyincreasingimportancetotheUnitedStates@2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 5 The Increasing Importance of Trade to the U.S. Since 1970, both imports and exports have been steadily rising as a fraction of U.S. gross domestic product (GDP). International trade has been becoming a more and more important part of the American economy. International trade is of increasing importance to the United States Figure 7.1