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Chapter 01 International Economics Is Different Overview The introduction to the subject of international economics has three major purposes: 1. Show that international economics addresses important and interesting current events and issues. 2. Show why international economics is special. 3. Provide a broad overview of the book. We begin with four controversies that show the importance of current issues addressed by international economics. The first controversy began with the rise in U.S. imports of automobile tires from China during 2004-2008. With rising imports, U.S. tire production decreased and some U.S. tire workers lost their jobs. The union that represented about half of U.S. tire workers filed a petition seeking temporary import protection, and the investigation concluded that the surge of tire imports from China was harming the U.S. industry. President Obama had the final decision about what to do. Here the controversy gets more interesting. The President could use the law to raise tariffs against tire imports from China, but should he? Key themes for the course arise in this case. Helping some domestic groups (U.S. tire makers and workers) harms other domestic groups (U.S. tire buyers). And, the basic conclusion is that the losers lose more than the winners win. President Obama did impose higher tariffs, and most of the predicted effects did seem to occur. However, the decline in tire imports from China led less to an increase in domestic production and employment and more to an increase in tire imports from other countries. And, it appears that the Chinese government retaliated against U.S. exports of chicken and auto parts to China. Overall, the United States and China lost some of the mutual gains from international trade. The second controversy arises from international migration, especially the increasingly vehement complaints about immigrants in many of the major rece
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