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How to win a trade war: When the United States took Japan



In the 1980s, Japan was the big bad. Its economy flourished – the second largest in the world – and many in the United States feared they were being overtaken.
Articles were published warning of "Japanning of America" ​​or an "economic Pearl Harbor" when Japanese companies bought US companies and landmarks. Lawmakers and commentators warned of a growing trade deficit between the two countries and complained of Japanese companies stealing US intellectual property rights and exploiting unfair trade agreements.
In an interview with "Morton Downey Jr. Show" in 1989, Trump complained that Japan had "systematically sucked the blood out of America ̵
1; sucked the blood out!"
"It's a big problem, and it's a problem that gets worse," Trump said about the US-Japan trade balance. "And they laugh at us."

However, there had already been changes. And far from overcoming the United States, Japan was falling far behind.

Trade War

After President Ronald Reagan joined in 1981, the United States began to push Japan to open its US business market and reduce trade imbalances between countries.

While Japan agreed on measures, including a limit on the number of cars exported to the United States, panic over Japanese trading power – and legislators on both sides demanded action.

Upon approval of a bill requiring tough trade requisitions against Japan, Robert Packwood, republican head of the Senate Finance Committee, promised to give Tokyo an eye for the eye. That's all they understand.
During a Finance Committee in 1985, Democratic Senate Max Baucus said: "Reagan predicted a future where trade will be king, the eagle will float, and America will be the most powerful trading land on earth." Good trade can be king, and eagles can be soaring, but they are not American eagles. America's trade performance has never been worse. "
That year, five countries – the United States, West Germany, France, the United Kingdom and Japan – signed the Plaza Accord, devaluation of the US dollar against the Japanese yen (and German mark), a boon for the United States, which led to an increase in exports and a lowering of the trade deficit with many Western European countries.
Still, Plaza Accord was not the end of US efforts against Japan. In 1987, Washington imposed 100% duty rates of $ 300 million of Japanese imports effectively. Blocked them from the US market.

Things quickly soured to Tokyo, as the yen rose in value, Japanese products became more expensive and countries turned away from the one-time export force, deploying the central bank to keep the yen's value low triggered by a stock price bubble. where the collapse contributed to pushing the country into recession and a "lost decade".

"Japan's exports and GDP growth stopped significantly in the first half of 1986," economists wrote. ne Joshua Felman and Daniel Leigh in a report to the International Monetary Fund. They concluded that while Plaza Accord did not cause Japan's economic downturn in itself, it issued a series of events – due to poor decisions in Tokyo – that led to the collapse.

Competitive lessons

Some of Trump's first advocates in politics involved railing against Japan in the 1980s and early 1990s. During that time, he began to demand the use of tariffs as a trading weapon.
While not referring to the historical relationship between the United States and Japan in the recent China conflict, Washington's success against Tokyo could affect his thoughts on how to deal with Beijing. One of his main trading advisors, Robert Lighthizer, also participated in the Japan talks in the 1980s.
In 2011, Lighthizer praised his "skepticism towards pure free trade dogma" when Trump whistled with a presidential war.

"The modern conservatism icon, Ronald Reagan, imposed quotas on imported steel, protected Harley-Davidson from Japanese competition, restricted imports of semiconductors and cars, and took countless similar steps to keep American industry strong," he wrote.

But while Lighthizer and Trump can take positive lessons from the trade war in the 1980s, Beijing is also aware – and China's leaders do not intend to copy Japan's mistakes.

In an editorial last year, China's Xinhua State News Agency warned that "Japan was severely harmed by its incorrect response" to the Plaza Accord and the US's trade press.

It owed the United States to sinful Japan for problems in the domestic economy, and to add a strong protectionist point of view was the direct driving force behind the Plaza Accord. "

This has been a common theme in the state media coverage of the trade war – that the United States is seeking to blame Beijing for conditions beyond its control.

  Donald Trump in 1989. At that time, he was in the way of Japan to exploit

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