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NIXON'S NEW ECONOM–
IC
PLAN
HITS
JAPAN–
Toyota (center ), Honda (in–
set), Sony (bottom) - house–
hold words in the United
States - their products will
be more expensive in rela–
tionship to American prod–
ucts as a result of President
N ixon's 1O% surcharge on
imported goods, part of new
economi c policy.
Lelt-
Ambossoclor
Colloge Photo,
Center-
Toyoto
Motor
Co . ,
Below
-
Wide
Wor/d,
lnset - Ambossodor
College
Photo
Octeber 1971
year. A period of free trade was begin–
ning between Europe and the
U.
S.
Then the U. S. threw a 10% surcharge
on imported goods above the existing
8.3 percent taríff. On top of the dollar
"float" of about 8 percent downward in
Germany, this makes German products
almost 30 percent more expensive in
America than they would be in Ger–
many ( disregarding shipping costs).
The German businessman must now
face such protectionism - and at the
beginning of a German recession.
It
is
hard to belíeve that Germany and other
Europeans would not retaliate - if they
could. But due to the present powerful
G.N.P. in the U. S., America's
busínesses in Europe, the primary posi–
tion of the dollar in trade, and other
reasons, Europe dares not retaliate
untíl those conditions change.
. . . and Japan
The future of Japan is tied intimately
to Europe. When the Common Market
countries failed to agree on action last
August, for instance, the Japanese also
refused to act on the yen. The yen is
tied closely to the currencies of Europe.
The Japanese absorbed $3 billion in
U. S. dollars in just the one week fol–
Jowing August 15 for the sole purpose
of avoiding a revaluation of the yen.
The
U.
S. requested a revaluation by 17
to 25 percent, the largest of postwar re–
valuations, but the Japanese did not
want to revalue even half as much.
Finally, reluctantly, on August 27, the
Japanese were forced to "float" the yen.
The reason Japan fought revaluation
for so long
is
that revaluation hurts
exports. And Japan, like Europe, lives
on trade. One third of Japan's exports
go to the U. S., and Japan doesn't want
to lose its largest market. Japan's export
surplus to the U. S. was just over $1
billion in each of the last 3 years
(1968-1970). But the 1971 surplus to
date with the U. S. topped $3 billion
annual rate, growing wider. That's the
main reason the U. S. built a
lO%
trade
barrier. Japan was the main target.
American busínessmen correctly ar–
gued that Japan has had a reputation
for quotas and restrictions which were
much
more protectionist
than even the
latest U.S. 10% surcharge. But in recent
years Japan has been pursuing a more