How Japan sparked Trump's 40-year love affair with tariffs

In the late 1980s, Donald Trump, a well-known businessman, faced financial difficulties and decided to take his luxurious yacht, the Trump Princess, to Asia. His goal was to attract wealthy Japanese investors. This was not the first time Trump had sought out Japanese buyers; he had been observing Japan's aggressive purchasing of American assets, including iconic properties like Rockefeller Center, during the economic boom of the 1980s. This experience shaped Trump's views on trade and America's relationship with its allies, particularly Japan. Barbara Res, a former executive vice-president at the Trump Organization, noted that Trump harbored a deep resentment towards Japan. He felt that Japanese businessmen were often celebrated as brilliant, while American contributions were undervalued. Trump believed that the United States was not receiving adequate compensation for its military support to Japan. He frequently expressed frustration about negotiating with large groups of Japanese businessmen, stating, 'I’m tired of watching other countries ripping off the United States. ' This sentiment, which could easily be mistaken for a modern-day quote, actually originated in the late 1980s when Trump appeared on CNN's Larry King Live, hinting at his future political ambitions. During this time, he also shared his business philosophy in his book, The Art of the Deal, and criticized America's trade policies in various national interviews. In a lively discussion with Oprah Winfrey, Trump asserted that he would approach foreign policy differently, insisting that allies should 'pay their fair share. ' He argued that Japan was 'dumping' products into the American market while making it nearly impossible for American businesses to operate in Japan. Jennifer Miller, a history professor at Dartmouth College, explained that many Americans shared Trump's concerns about the economy during this period. Japan was emerging as a formidable competitor in manufacturing, particularly in consumer electronics and automobiles. As American factories closed and Japanese brands gained market share, discussions about Japan potentially surpassing the United States as the world's leading economy became increasingly common. Miller noted that Trump symbolized a broader sentiment among those questioning America's leadership in the global order. Before his appearance on Oprah, Trump had spent nearly $100,000 to publish an open letter in major newspapers, declaring, 'There’s nothing wrong with America’s Foreign Defense Policy that a little backbone can’t cure. ' In this letter, he accused Japan and other nations of taking advantage of the United States for decades. He claimed that Japan, benefiting from America's military protection, had built a robust economy with significant surpluses. Trump believed that the solution was to impose taxes on these wealthy nations. He wrote, 'The world is laughing at America’s politicians as we protect ships we don’t own, carrying oil we don’t need, destined for allies who won’t help. ' This advertisement served as a powerful introduction to Trump's foreign policy vision, which was rooted in the belief that allies were freeloaders and that the liberal internationalist approach that had prevailed since World War II was ineffective in a competitive world. He advocated for a more aggressive, protectionist trade policy. Clyde Prestowitz, who negotiated with Japan during the Reagan administration, criticized Trump's simplistic approach to trade. He argued that Trump's focus on tariffs was more about showmanship than effective policy. Prestowitz contended that the real issue was the lack of a strategic manufacturing policy in the United States, despite ongoing complaints about unfair trade practices. Over time, fears of Japan's economic rise subsided, and Japan became an ally. Today, China is viewed as the United States' most significant corporate competitor. Recently, Trump welcomed Japan's Prime Minister Shigeru Ishiba to the Oval Office, but his governing philosophy regarding tariffs remains unchanged. Trump continues to view tariffs as a tool to pressure other countries into opening their markets and reducing trade deficits. Michael Strain, an economist at the American Enterprise Institute, noted that Trump frequently reiterates his beliefs about tariffs, which have persisted for 40 years. Strain acknowledged that many students share Trump's intuitive understanding of the economy, making it challenging for professors to convey a more nuanced perspective. Despite Trump's influence over the Republican Party and his departure from the traditional embrace of free trade, Strain believes he has not fully convinced skeptical lawmakers, business leaders, and economists. The ongoing debate centers around Trump's views that foreign imports are detrimental, that the trade deficit is a valid measure of policy success, and that the ideal state for the U. S. economy is to import only goods that cannot be produced domestically. Strain cautioned that threats to increase tariffs on U. S. allies could deter business investment and weaken international alliances. Joseph LaVorgna, a former chief economist of the National Economic Council during Trump's first term, argued that there has been too much focus on tariffs without a comprehensive understanding of Trump's broader objectives. He suggested that the president aims to revitalize domestic industry, particularly in high-tech manufacturing. LaVorgna explained that the administration believes it can attract more corporations to the U. S. through a combination of tariffs, deregulation, lower energy costs, and reduced corporate taxes. He stated, 'President Trump understands that free trade is great in theory, but in the real world, fair trade is essential for a level playing field. ' While many Republicans have remained loyal to Trump, some are concerned about the potential impact of rising prices on their constituents and hope to persuade him to reconsider his tariff policies.