Michael J. Potis
Abstract: The current outburst of protectionist sentiment in the United States vis-à-vis Japanese car makers owes its strength, in part, to the effects of world-wide recession and inflation. But a more reasonable and far more convincing explanation for the United States auto industry’s problems can be found by examining Detroit’s inability to correctly assess the realities of their time. This article briefly explores some of the reasons for Detroit’s failure to compete with Japanese auto makers and speculates on the likely effects that Japan’s “voluntary” limitation on auto exports to the United States will have upon the American consumer, the Japanese auto industry, and the world’s auto producers. This author finds that the likely effects of the trade barrier will be negative for American consumers, world auto makers, and Japanese car makers. US car makers will experience only marginal, insignificant benefits. The protection afforded US auto makers through the limitation of US-bound Japanese autos will probably lower the well-being of Japan, the United States, and the rest of the world. Instead US automakers could engage in more joint ventures with foreign automobile manufacturers to develop entirely new models, or consider the benefits of merging with fellow American manufacturers. These approaches show considerable promise for strengthening the American auto industry.
Keywords: protectionism, trade, Japan, USA, automobiles, Detroit
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