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Lessons For Today From The U.S.-Japan Trade War Of The 1980s


We're going to stick with that trade war between the U.S. and China. It's a source of deja vu for some people who lived through a similar U.S. conflict with Japan. Back in the 1980s, as now, you had a rising Asian power that some American businesses and politicians criticized for unfair trading practices. Here to talk about some of the similarities - and the differences - is Kristin Vekasi. She is a political science professor specializing in Northeast Asia. She joins us from the University of Maine. Welcome to the program.

KRISTIN VEKASI: Thanks for having me.

CORNISH: So when I think back to growing up, I remember hearing about "Buy American" and hearing a lot of anti-Japanese sentiment basically. Can you talk about what the trade tensions were like at that time?

VEKASI: So in the 1980s and 1990s, there's a lot of concern about the balance of trade between Japan and the United States. We were buying so much stuff from Japan, and our manufacturing sector was getting hollowed out. We were losing American jobs; we losing American products. As a response to that, a lot of Americans started to have "Buy American" campaigns. There was something called Japan-bashing, which was rhetorical but was also literal when, particularly in auto manufacturing centers, people were taking baseball bats and smashing Japanese vehicles in the streets to show their dissatisfaction and anger.

CORNISH: How did the U.S. approach this imbalance that they saw?

VEKASI: Well, the United States had a number of different responses. One of the large concerns in the early 1980s with Japan is that Japan had set the yen to a rate against the dollar that made it really cheap for Americans to buy goods that were produced in Japan and then imported into the United States. We approached that in a multilateral fashion with European countries to get Japan to float its currency.

Another approach is we had something called voluntary export restraints, where we asked the Japanese to voluntarily restrict the number of automobiles that they sold in American markets. In response to that, the Japanese started to open up factories to manufacture Japanese-branded cars in the United States. We saw that in Ohio originally and then in other areas of the United States, as well, by Toyota and Honda especially.

CORNISH: Are there aspects of the news right now about China and the trade war that feel familiar to you?

VEKASI: Absolutely, there are similarities - in particular the level of concern or even panic about the rise of China as an economic power and perhaps, also, military power - really reflecting the rise of Japan as an economic power in the '70s, '80s and even '90s. I also want to point out, I see some strong dissimilarities, in particular because Japan was and continues to be one of the United States' strongest allies in the world and, of course, in the Asia Pacific. And China does not have that same alliance role.

CORNISH: Japan also suffered in the decade after, essentially kind of losing this trade war. Can you talk about the differences in terms of China, what lessons they can take from this?

VEKASI: So Japan, after they had the lost decade of the 1990s and still have not returned to high rates of growth since then, one thing that China can do and is currently trying to do with their economic policy is to develop an economy that is driven by domestic demand rather than foreign trade. And indeed, this is a key part of Xi Jinping's China 2025 plan.

CORNISH: In the meantime, for the U.S., what lessons can the Trump administration take away from that period?

VEKASI: I think one of the important lessons from our trade frictions with Japan is that some of them were solved multilaterally. And now, as other economies have, you know, continued to grow and be bigger - for example, the European Union or, you know, vis-a-vis China, the Japanese economy, South Korean economy - that we need our allies to work in tandem with us in order to get good gains from China.

Many of the concerns American companies have with China - intellectual property rights protection, access to Chinese consumer markets - are issues that Japanese firms have, that European firms have, that South Korean firms have. And we could really benefit from working together with our allies to come to a more prosperous conclusion to this for everybody.

CORNISH: Kristin Vekasi, she's a political science professor at the University of Maine. Thank you for speaking with us.

VEKASI: My pleasure. Thank you for having me. Transcript provided by NPR, Copyright NPR.

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