Time for Economic Nationalism

by Patrick J. Buchanan – June 12, 1995

With the collapse of U.S.- Japan trade talks, the hour of the economic nationalist may be at hand.

In British Columbia, U.S. demands that Japan open her markets to more American autos and parts were rudely rebuffed. Japan’s top negotiator virtually dared us to impose sanctions. We will haul you up before the World Trade Organization. Tokyo warns; and there we will have you branded a violator of the free trade principles you so noisily preach — before an international tribunal you yourselves set up.

Angry Clintonites intend to impose 100 percent tariffs on $6 billion of Japan’s exports. This doesn’t even qualify as a spanking. Americans are in a mood for action; and the GOP should demand more serious sanctions. Enough is enough.

In 1953, we had 60 percent of Japan’s auto market; by 1960, our share had been slashed to 1 percent. That is all we have now. Since 1970, Japan has purchased 400,000 U.S. cars, while selling us 40 million.

Where Tokyo runs an annual trade surplus of $150 billion, our merchandise trade deficit is at $166 billion. As this vast transfer of U.S. wealth and technology was taking place, we were spending 6 percent of our GNP on defense, while free-riding Tokyo kept defense spending below 1 percent.

But now that Japan has given Mr. Clinton’s trade envoy the wet mitten across the face, what is America to do?

Free trade ideologues side with the Japanese. To them, trade deficits don’t matter; and U.S. consumers who swap pieces of paper (dollars) for quality Japanese goods are the real winners.

But it is getting harder to convince the nation. As our share of world GDP had fallen, and the dollar has shrunk against the mark and yen, the real income of Americans who work with their hands, tools and machines has fallen 20 percent, in 20 years. Anecdotal evidence of a new two-tier economy is everywhere. College graduates come home to live with parents. Mothers leave children in day care, or at school, to take jobs to maintain the family standard of living.

Look at the Mon Valley of Pennsylvania; look at bombed-out, gutted, Detroit, once the forge and furnace of the Great Arsenal of Democracy. Are they not as much the fruits of U.S. trade policy, as that rich variety of consumer goods in the malls of Tyson’s Corner?

Japan’s negotiators hang tough for a simple reason: They are not ideologues; they are economic nationalists looking out for Japan first. Why should they abandon a protectionist trade policy that has worked splendidly for them, to adopt a U.S.-style t rade policy that has failed dismally for us? It is the Americans, not the Japanese, who are the riddle wrapped in the enigma here.

As for those U.S. officials who incessantly lecture them on free trade, Japan’s envoys must have a special contempt. For many of the biggest names wind up on Tokyo’s payroll as lobbyists for the Empire of the Sun.

But now only Middle America is now losing patience. So too, is the Establishment.

“We are being played for fools,” writes Thomas Friedman of The New York Times. “Japan will only change when we use the full strategic and economic weight of the U.S.-Japan strategic relationship — not just the economic one — and specific retaliations against Japanese exports.

Amen. Instead of whining to the WTO, let Congress, for once, take unilateral action in the U.S. national interest. An across-the board tariff of 10 percent on all Japanese goods entering the U.S. would net us $12.5 billion. That shock would awaken Tokyo and the predatory traders of East Asia to the new reality that we Americans have begun looking out for America first. Dollar for dollar, the revenue could be used to cut corporate taxes on small business. We would be replacing U.S. income taxes wit h consumption taxes — but only on foreign goods.

As the price of Japanese autos rose, Detroit could recapture old markets, creating new American jobs; while small businesses could use their $12.5 billion in tax relief to create still more jobs.

If Japan retaliates, raise the tariff to 20 percent.

Japan is the aggressor here. But Japan cannot win a trade war with America. She would be putting at risk $12 billion in exports to us.

Toward free traders like Canada and Europe, our policy should remain free trade. But toward predators like Japan and China, it is a time for hardball. Mr. Clinton’s men are gingerly moving that way. Unencumbered by conviction they will play the nationalist card. And if the GOP stays with GATT and globalism, it will ride them down to political ruin.

Let us return to the trade policy created by Washington and Hamilton, pursued by Jefferson and Jackson, perfected by Lincoln and TR, called The American System. It converted the U.S. from 13 rural colonies into the greatest industrial power the world had ever seen, producing 40 percent of the world’s goods by World War II.