Hong Kong(CNN Business) As President Donald Trump lands in Japan Saturday amid a worsening trade war with China, he could well be thinking back to a previous economic spat between Washington and an Asian economic powerhouse.

In the 1980s, Japan was the big bad. Its economy was booming — the second largest in the world — and many in the United States feared they were about to be overtaken.

Articles were published warning of the "Japanning of America" or an "economic Pearl Harbor," as Japanese businesses bought US companies and landmarks. Lawmakers and commentators warned of a growing trade deficit between the two countries, and complained of Japanese firms stealing US intellectual property and taking advantage of unfair trade deals.


In an interview with the "Morton Downey Jr. Show" in 1989, Trump himself complained that Japan had "systematically sucked the blood out of America — sucked the blood out!"

"It's a huge problem, and it's a problem that's going to get worse," Trump said of the US-Japan trade balance. "And they're laughing at us."

By then, however, change was already happening. And far from overtaking the United States, Japan was about to fall far behind.


Trade war
After President Ronald Reagan took office in 1981, the United States started pressuring Japan to open its market up to American companies and reduce the trade imbalance between the countries.

While Japan agreed to measures including a limit on the number of cars it exported to the United States, panic over Japanese trade power grew — and lawmakers on both sides demanded action.

In approving a bill calling for tough trade reprisals against Japan, Robert Packwood, then Republican head of the Senate's finance committee, promised to give Tokyo "an eye for an eye ... that is all they understand."

During a 1985 finance committee hearing, Democratic Sen. Max Baucus said that: "Reagan predicted 'a future in which commerce will be king, the eagle will soar, and America will be the mightiest trading nation on Earth.' Well, commerce may be king. And eagles may be soaring. But they're 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, devaluing the US dollar against the Japanese yen (and the German Deutsche Mark). This was a boon for the United States, leading to an increase in exports and a lowering of its trade deficit with many Western European countries.

Yet the Plaza Accord wasn't the end of US action against Japan. In 1987, Washington imposed 100% tariffs on $300 million worth of Japanese imports, effectively blocking them from the American market.

Things quickly turned sour for Tokyo. As the yen increased in value, Japanese products became more and more expensive, and countries turned away from the one-time export powerhouse. Efforts by the country's central bank to keep the yen's value low sparked a stock price bubble, the collapse of which helped push the country into recession and a "lost decade."

"Japan's export and GDP growth essentially halted in the first half of 1986," economists Joshua Felman and Daniel Leigh wrote in a report for the International Monetary Fund. They concluded that while the Plaza Accord did not cause Japan's economic downturn by itself, it did trigger a series of events — compounded by poor decisions in Tokyo — which led to the collapse.


Competing lessons
Some of Trump's first forays into politics involved railing against Japan during the 1980s and early 1990s. During that time, he started calling for the use of tariffs as a trade weapon.

While he has not referenced the historical US-Japan relationship during the recent China conflict, Washington's success against Tokyo could influence his thinking on how to handle Beijing. One of his key advisers on trade, Robert Lighthizer, also took part in Japan negotiations in the 1980s.

In 2011, as Trump flirted with a presidential run, Lighthizer praised his "skepticism toward pure free-trade dogma."

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

Yet while Lighthizer and Trump may take positive lessons from the 1980s trade war, Beijing is also paying attention — and China's leaders have no intention of copying Japan's mistakes.

In an editorial last year, China's Xinhua state news agency warned that "Japan was seriously hurt by its improper response" to the Plaza Accord and US trade pressure.

It blamed the US for scapegoating Japan for problems in the domestic economy, adding a "strong protectionist sentiment was the direct driving force behind the Plaza Accord."

This has been a common theme in state media coverage of the trade war -- that the US is seeking to blame Beijing for matters outside its control.

Donald Trump in 1989. At that time, he was inveighing against Japan for taking advantage of the US on trade.
Donald Trump in 1989. At that time, he was inveighing against Japan for taking advantage of the US on trade.
Repeating history
Of course 2019 is not 1985, and China is not Japan. Beijing is far stronger both economically and politically than Tokyo was in the 1980s, with Japan dependent on the United States for national security and less willing to risk Washington's ire.

"Japan was an easy target for US bashing. After the second world war, Japan has been both politically and economically dependent on the US, resulting in limited bargaining power to counteract the US," analysts Alicia Garcia-Herrero and Kohei Iwahara wrote last week. "China is in a better position to resist US pressure."

The risk in this instance isn't of a failure to learn from history, but that both parties could take the wrong lessons.

Trump and Lighthizer, having cut their teeth in the battles against Tokyo, could assume that a similarly aggressive policy will prompt Beijing to bend to their demands. Chinese negotiators have already learned what happens when you push back against Trump, with trade talks collapsing this month after Beijing reportedly attempted to alter the deal at the last minute.

The failure of those talks led to an immediate escalation in tensions, with new tariffs imposed by both sides. This could be blamed on Beijing's late changes, but equally on Washington's unwillingness to negotiate.

At the same time, China's interpretation of the 1980s could also lead it to make missteps.

On Thursday, Foreign Ministry spokesman Lu Kang said any "mutually beneficial deal must be based on mutual respect, equality and win-win outcomes." But as many observers have noted, what China's leaders regard as "win-win" often means a win on its terms, and a desire to avoid repeating Japan's mistakes could result in Beijing refusing to take a minor loss that could ultimately lead to a better overall agreement.

Japan is currently celebrating the beginning of the Reiwa era, under a new emperor, a time to wipe the slate clean and start again. US and Chinese trade negotiators might be better off copying that lesson than those of the 1980s.

https://www.cnn.com/cnn/2019/05/24/business/us-china-trade-war-japan-intl/index.html

The world powers

The amount of control the US exerts ehn

Although I respect and love the USA I can only see this trade war acts as bullying. Imagine they accused the Japanese of the same information stealing and spying because they saw the prowess of the Japanese in the 1980's. They slammed Japan with sanction and tariff and successfully halted it's economic development all because of the fear of losing the top spot in the world.

Instead of them to find other productive means to tackle Asian tigers, they normally resort to bullying all because weak Western nations are all too ready to obey them anytime anyday hiding beneath the facade of economic friendship and treaties.

Like the article said...the Chinese is very different from the Japanese and will be ready to fight for their economic relevance. I thought developmental strides should be applaudes not bullied and the USA should review some of the actions it takes, even if there is no one bold enough to stand up to them.
Even if they succeed in crippling the Chinese economy, another Asian tiger will also rise and I will see how long the US will keep using this stunt

USA must know that the Chinese cannot be bullied. The chinese are way too advanced to make the mistakes that Japan made.

The Chinese FDI into the USA is almost in trillions now, and guess what? If they pull out of those deals then USA businesses will crumble.

I believe the Chinese are saving that as their last trump card after pulling plugs on the USA debt.

America can not even see what is coming.

Billy0naire:
USA must know that the Chinese cannot be bullied. The chinese are way too advanced to make the mistakes that Japan made.

The Chinese FDI into the USA is almost in trillions now, and guess what? If they pull out of those deals then USA businesses will crumble.

I believe the Chinese are saving that as their last trump card after pulling plugs on the USA debt.

America can not even see what is coming.

Seriously the US is not trying at all. Even if it is trying to protect it's interest, when people peek into it's previous trade battles and discover that it is still the same baseless accusations, they'll have no choice than to conclude it as bullying.

Trump I love you, but we are talking about Chinese here , people who are advanced in psychological warfare

Cletus77:


Seriously the US is not trying at all. Even if it is trying to protect it's interest, when people peek into it's previous trade battles and discover that it is still the same baseless accusations, they'll have no choice than to conclude it as bullying.

It has always been bullying. They have just three strategies, bullying and overthrowing Governments and going to War.

The Chinese are their match. That is why the Chinese focused on building the military first and devaluing their currency, then the Manufacturing, Infrastructures, e-commerce and now they are ready for the next phase, which is pulling plug on US debts and FDIs.

US can not devalue the dollars now, cos if they do, the Chinese will devalue their Yuan and launch national cryptocurrency.

It is over for Uncle Sam. No more monopolar Earth, it is the Era of Multipolar world leadership.

China has 1.4B humans and America is 330M, even with AI soldiers, Chinese will beat the USA mercilessly at war.

Billy0naire:


It has always been bullying. They have just three strategies, bullying and overthrowing Governments and going to War.

The Chinese are their match. That is why the Chinese focused on building the military first and devaluing their currency, then the Manufacturing, Infrastructures, e-commerce and now they are ready for the next phase, which is pulling plug on US debts and FDIs.

US can not devalue the dollars now, cos if they do, the Chinese will devalue their Yuan and launch national cryptocurrency.

It is over for Uncle Sam. No more monopolar Earth, it is the Era of Multipolar world leadership.

China has 1.4B humans and America is 330M, even with AI soldiers, Chinese will beat the USA mercilessly at war.

You killed it bro..
US should know that the powers before them didn't resort to bullying else they wouldn't have become what they are today. They like thinking that they're so powerful because of weaponry and nuclear power that has been replicated by China sef

BlackfireX:
Trump I love you, but we are talking about Chinese here , people who are advanced in psychological warfare

We all love America but standing up to condemn some certain things shows our true love for em

You're fighting Iran, you're fighting Russia,

You're fighting North Korea, you're fighting Syria,

You're fighting Iraq, you're fighting Yemen,

You're fighting Libya, you're fighting Venezuela

You're fighting China, you're raping Nigeria

Are you the only Country in the World?

In a 2016 report, the International Criminal Court chief prosecutor Fatou Bensouda initiated an investigation into possible war crimes in Afghanistan involving the torture of 61 prisoners committed by the US Army and the torture and rape of 27 prisoners committed by the Central Intelligence Agency (CIA) at CIA prison sites in Poland, Romania and Lithuania.

In response to the ICC inquiry in 2018, John Bolton warned:

"We will ban its judges and prosecutors from entering the United States. We will sanction their funds in the US financial system, and we will prosecute them in the US criminal system. We will do the same for any company or state that assists an ICC investigation of Americans,”

After the Court responded that it would continue its investigation with “war crimes and crimes against humanity committed by foreign government forces in Afghanistan,”

True to his word, in early April 2019, Mike Pompeo revoked the visa for the ICC chief prosecutor - Fatou Bensoud.

In a devastating setback for the ICC, its "pre-trial chamber" recently refused to approve the investigation from moving forward citing a lack of "US cooperation".

My children; Is this the same bastard & abominable Country that is supposedly a beacon of hope & freedom?

WW3 - Please come kwickily! Russian Iskander-M, Topol-M, Bulava, RS-28 Sarmat & Zircon hypersonic - are crying for justice & vengeance.

Zoharariel:
You're fighting Iran, you're fighting Russia,

You're fighting North Korea, you're fighting Syria,

You're fighting Iraq, you're fighting Yemen,

You're fighting Libya, you're fighting Venezuela

You're fighting China, you're raping Nigeria

Are you the only Country in the World?

In a 2016 report, the International Criminal Court chief prosecutor Fatou Bensouda initiated an investigation into possible war crimes in Afghanistan involving the torture of 61 prisoners committed by the US Army and the torture and rape of 27 prisoners committed by the Central Intelligence Agency (CIA) at CIA prison sites in Poland, Romania and Lithuania.

In response to the ICC inquiry in 2018, John Bolton warned:

"We will ban its judges and prosecutors from entering the United States. We will sanction their funds in the US financial system, and we will prosecute them in the US criminal system. We will do the same for any company or state that assists an ICC investigation of Americans,”

After the Court responded that it would continue its investigation with “war crimes and crimes against humanity committed by foreign government forces in Afghanistan,”

True to his word, in early April 2019, Mike Pompeo revoked the visa for the ICC chief prosecutor - Fatou Bensoud.

In a devastating setback for the ICC, its "pre-trial chamber" recently refused to approve the investigation from moving forward citing a lack of "US cooperation".

My children; Is this the same bastard & abominable Country that is supposedly a beacon of hope & freedom?

WW3 - Please come kwickily! Russian Iskander-M, Topol-M, Bulava, RS-28 Sarmat & Zircon hypersonic - are crying for justice & vengeance.

They can try their poo with other countries but China no go gree for them lai lai. Us is busy bullying everybody because them they claim say them get allies

Zoharariel:
You're fighting Iran, you're fighting Russia,

You're fighting North Korea, you're fighting Syria,

You're fighting Iraq, you're fighting Yemen,

You're fighting Libya, you're fighting Venezuela

You're fighting China, you're raping Nigeria

Are you the only Country in the World?

In a 2016 report, the International Criminal Court chief prosecutor Fatou Bensouda initiated an investigation into possible war crimes in Afghanistan involving the torture of 61 prisoners committed by the US Army and the torture and rape of 27 prisoners committed by the Central Intelligence Agency (CIA) at CIA prison sites in Poland, Romania and Lithuania.

In response to the ICC inquiry in 2018, John Bolton warned:

"We will ban its judges and prosecutors from entering the United States. We will sanction their funds in the US financial system, and we will prosecute them in the US criminal system. We will do the same for any company or state that assists an ICC investigation of Americans,”

After the Court responded that it would continue its investigation with “war crimes and crimes against humanity committed by foreign government forces in Afghanistan,”

True to his word, in early April 2019, Mike Pompeo revoked the visa for the ICC chief prosecutor - Fatou Bensoud.

In a devastating setback for the ICC, its "pre-trial chamber" recently refused to approve the investigation from moving forward citing a lack of "US cooperation".

My children; Is this the same bastard & abominable Country that is supposedly a beacon of hope & freedom?

WW3 - Please come kwickily! Russian Iskander-M, Topol-M, Bulava, RS-28 Sarmat & Zircon hypersonic - are crying for justice & vengeance.

Actually there are a lot of ill informed folks on
Nairaland... Or maybe just maybe you decided to be ignorant because of your anti Americanism.

United States of America never ratified their Rome Statute signature. Hence they're not a member of ICC,, they're not a state party to the treaty that established the Rome Statute (ICC). The ICC has no jurisdiction over a US national whether home or abroad,, however if a US citizen commit a crime in a foreign land.. . It's left for the national government of that country to prosecute him/her,, not ICC!!


In other words,, an English man will come to Nigeria and defraud, kill
a Nigerian. Instead of EFCC, NPF or army to bring him to justice/prosecute him according to Nigerian laws, ,, ECOWAS will intrude and use her multilateral armed force (ECOMOG) to fish out the British fraudster in Nigeria!!
No b so dem dey do am..

There are established rules guiding bilateral and multilateral treaties between and among actors in the international system.