How Japanese automakers’ Trump crisis could develop

U.S. President Donald Trump’s bashing of Japanese automakers escalated from his criticism of Toyota Motor Corp.’s plan to build a new plant in Mexico to a call on the automakers to boost their output in the United States and to a demand that Japan import more made-in-America vehicles.

The tone of his rhetoric sounds far more radical than in the demands made by the administration of U.S. President Ronald Reagan in the 1980s, when the bilateral friction over trade disputes were at its peak. Trump will likely not let up until there are visible signs of progress such as recovery in employment by the U.S. automakers and their exports. The only choice left for Japanese makers like Toyota and Honda may be importing the vehicles made in their U.S. plants to Japan.

Alarmed over Trump’ increasingly protectionist rhetoric, one Toyota insider started reviewing the history of Japan-U.S. auto trade talks of the 1980s — in hopes of finding clues to coping with the emerging situation.

Back in the 1980s, Japan accounted for roughly 60 percent of the U.S. trade deficit — and Japanese auto exports to the U.S. was responsible for a major portion of that. Fuel-efficient Japanese cars were extremely popular among American consumers because of high gasoline prices until the cost of oil started falling in 1986.

The Reagan administration forced the Japanese auto industry into accepting a voluntary restraint on their exports to the U.S., under which the annual shipments from Japan was limited to 1,680,000 vehicles. The Japanese automakers responded by launching production in the U.S. one after another to evade the trade restrictions — Honda was the first by building its long-planned auto plant in Ohio, and was followed by Nissan and Toyota.

In 2016, 59 percent of the Japanese vehicles sold in the U.S. market were made in the automakers’ plants in the U.S. The figure compares favorably with 53 percent for European automakers and 55 percent for South…

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