Tuesday, August 14, 2018

Can A Reagan-Era Policy Offer An Alternative To Tariffs?

It was 1981.
A new Republican president with a background in the entertainment business was trying to jump-start the U.S. economy out of a brutal recession.

The president pushed tax cuts.

Then his administration had to come up with a plan to deal with trade. America's auto industry was suffering, as new competition came in from Japan.

What the Reagan administration did about it has shaped the auto industry we see today in America. And it could serve as an example for the Trump administration in its ongoing, rancorous trade battles.

The man that President Ronald Reagan put in charge of his trade policy in 1981 was William Brock.

Brock says that, at that time, Congress was looking to take tough action to stop Japanese car imports. He went to the Japanese and proposed a different solution.

"The thought was that if Japan would put some quiet, voluntary limits on their shipments, it would help ease the problem until we could walk through a transition period," Brock says.

This idea is what's known as a voluntary export restraint. Instead of a tariff, which acts as a tax on imports, the restraint is more like a voluntary quota. The Japanese carmakers agreed they wouldn't send more than certain amount of cars to the U.S. each year. - Read More

Can A Reagan-Era Policy Offer An Alternative To Tariffs?


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