Abstract

In an effort to reduce trade deficit, the United States has sought to introduce tariffs on imports, primarily of Chinese products. However, countries with which the United States runs large trade deficits are under pressure to negotiate about reducing the bilateral trade deficit with the United States. Among them is Japan. The US administration in bilateral trade talks with Japan toward a new bilateral trade agreement seeks to encourage US exports of agricultural products to Japan and reduce imports of Japanese cars in the US. If the trade agreement contains restrictions on the export of Japanese cars to the US market, it will damage Japanese manufacturers, but also customers in the United States, due to the higher costs of buying a car. However, it would not be the first time since Japan, under the pressure of the United States, introduced Voluntary Export Restraint (VER) in 1981 on car exports to the United States that were abolished in 1994. These restrictions have brought huge costs for both Japanese car manufacturers and consumers in the United States. The outcome of the US and Japan trade talks about a new trade agreement will show whether history repeats itself.

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