The SHOCKING Truth About America’s PAST Trade War with Japan

The SHOCKING Truth About America’s PAST Trade War with Japan

the US and China are locked in a high stakes trade war today but this isn’t the first time America has clashed with an Asian economic powerhouse forty years ago the US faced a similar showdown with Japan while both conflicts involve tariffs and economic rivalry the outcomes and the players are vastly different let’s break it down in the 1980s Japan transformed from a post war rebuilding nation into an economic titan companies like Toyota Sony and Panasonic became household names worldwide Japan’s secret a mix of government backed industrial policies a culture of saving money and a weak currency by 1985 the US trade deficit with Japan hit $50 billion American factories closed workers lost jobs and politicians panicked sound familiar to protect US automakers like Ford and GM the Reagan administration pressured Japan into Japan voluntarily agreed to cap car exports to 1.68 million vehicles per year but Japan adapted they started selling pricier models to keep profits high they built factories in Ohio and Tennessee to bypass the limits effectively neutralizing the intended protective effect of the VERs equally important though often overshadowed was the role of the bank of Japan in currency management throughout the early 1980s the BOJ consistently intervened in foreign exchange markets to keep the yen artificially low this policy provided Japanese exporters with a formidable price advantage on global markets fueling the country’s trade surpluses and industrial dominance even after Japan accepted voluntary export restraints VER’s on cars the currency strategy persisted to American officials this signaled that Japan’s competitive edge wasn’t just about efficient factories it was about an undervalued currency amplifying its export power the first containment effort had failed to strike at the heart of the imbalance in fact President Reagan brought up this concern during a radio address in November 1983 here’s a clip let’s recognize Japanese and Korean efficiency for what it is if their products are better made and less expensive then Americans who buy them benefit by receiving quality and value and that’s what the magic of the marketplace is all about the best course for us to take is to take the offensive and create new jobs through trade lasting jobs tied to the products and technology of tomorrow I’m confident American products can compete in world markets if they can enter foreign markets as easily as foreign products can enter ours currently they can’t restrictions and tariffs limit US imports into Japan and Korea Prime Minister Nakasone and I have agreed on an agenda for progress to reduce and gradually eliminate these barriers my goal is to help our farmers bring Japanese consumers lower prices for beef citrus and other agricultural goods help our mining coal and gas industries export energy resources to a resource poor Japan and help our communications industries find new markets for their satellites and other products I also encourage the Prime Minister to open his capital markets to more foreign investment this will increase demand for Japanese yen helping its price rise in relation to the dollar thereby making it easier for the Japanese to buy our products and making our products better able to compete in other markets in 1985 President Reagan convinced the G5 countries meaning Japan West Germany France and the United Kingdom to sign the a deal to weaken the US dollar this made Japanese exports more expensive overnight the yen doubled in value by 1988 Japanese companies struggled to sell abroad and the bank of Japan slashed interest rates to keep the economy afloat cheap money fueled a massive bubble in real estate and stocks when it burst in 1991 Japan entered a lost decade of stagnation that lasted 30 years a young Donald Trump watched the US Japan trade war closely in 1987 he spent $100,000 on newspaper ads demanding a 20% tax on Japanese imports accusing Japan of ripping off America he repeated this on TV shows like Oprah and Larry King Live you took out a full page ad in a major US newspapers uh last year criticizing US foreign policy what would you do differently Donald I’d make our allies forgetting about the enemies the enemies you can’t talk to so easily I’d make our allies pay their fair share we’re a debtor nation something’s gonna happen over the next number of years with this country cause you can’t keep going on losing 200 billion and yet we we let Japan come in and dump everything right into our markets and everything it’s not free trade if you ever go to Japan right now and try to sell something forget about it Oprah just forget about it it’s almost impossible they don’t have laws against it they just make it impossible they come over here they sell their cars their VCR’s they knock the hell out of our companies and hey I have tremendous respect for the Japanese people I mean you can respect somebody that’s beating the hell out of you but they are beating the hell out of this country Kuwait they live like kings the poorest person in Kuwait they live like kings and yet they’re not paying we make it possible for them to sell their oil why aren’t they paying us 25% of what they’re making it’s a joke I think I’d be inclined I would I would say that I would have a hell of a chance of winning cause I think people I don’t know how your audience feels but I think people are tired of seeing the United States ripped off and I can’t promise you everything but I can tell you one thing this country would make one hell of a lot of money from those people that for 25 years have taken advantage it wouldn’t be the way it’s been believe me these views laid the groundwork for his future trade wars like 1980s Japan China has used state support and cheap currency tactics to dominate industries like solar panels electric vehicles and semiconductors its trade surplus with the US hit $375 billion in 2023 sparking similar fears of economic takeover but there are key differences first China’s economy is five times larger than Japan’s was in the 1980s with strong trade ties with countries all over the world second Japan is a US ally home to 55 to 60,000 US military personnel China is not third China is a strategic rival with nuclear weapons fourth the US dollar remains dominant but China is pushing its currency the yuan in oil deals and loans to developing nations this could weaken the dollar’s global role over time unlike Japan China isn’t backing down but both sides are hurting from their economic weak spots in China a real estate crash local government debt crisis and deflation in the US soaring national debt $35 trillion and inflation from tariffs the US won the 1980s trade war by crushing Japan’s economy but the victory was hollow Detroit automakers never fully recovered cheap tariffs LED to higher consumer prices Japan’s stagnation slowed global growth for decades but China won’t fold it has Learned from Japan’s mistakes it tightly controls its currency avoiding Japan’s Plaza Accord disaster invest heavily in self sufficiency like ‘Made in China 2025’ has deployed a long term investment in trade and infrastructure with non western partners through initiatives like the belt and Road Initiative so what’s next no one knows the US China trade war isn’t just about tariffs it’s a battle over who sets the rules while the 1980s conflict ended with Japan’s decline China’s size and ambition mean this rivalry could reshape the world order one thing’s clear the stakes are higher than ever and the fallout will affect everything from your smartphone’s price to the stability of your future job

The SHOCKING Truth About America’s PAST Trade War with Japan

Japan Played Nice — They Were Crushed. China’s Playing to Win.

In the 1980s, Japan’s economic rise terrified America—leading to tariffs, export restrictions, and the Plaza Accord, which forced the yen to surge. The result? Japan’s economy stagnated for decades.

Today, history seems to repeat itself as the U.S. takes on China in a high-stakes trade war. But this time, Beijing isn’t backing down.

For full transcripts and resources: https://decisivemomentsfull.substack.com/

⏱️Timeline:
00:00 — Opening Hook:
“History Repeats: Why the U.S.–China Trade War Echoes the Past”

00:22 — The Rise and Fall of Japan
“How Reagan Crushed Japan’s Export Machine — And What It Cost”

04:43 — Enter Trump
“Trump’s Origin Story: Born in the Japan Trade War”

06:22 — China Learns from Japan’s Mistakes
“China Won’t Repeat Japan’s Fall — Here’s Why”

07:37 — The Next Front
“U.S. vs China: A Clash Too Big to Contain?”

08:49 — Final Take
“The Real Price of a Trade War”

(initially published in may 2025)
#uschinatradewar #USjapantradewar

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Decisive Moments in GeoEconomy explores how nations use money, markets, and technology as weapons of influence.
From trade wars and sanctions to currency shifts and supply chain showdowns, we break down the economic power plays shaping our world.

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