My fellow Americans:
Prime Minister Nakasone of Japan is scheduled to visit the White House here next week. This is an important visit. Because while I look forward to addressing our relationship with Japan, which remains a good friend overall, the recent differences between our countries on trade issues are also high on our agenda.
As you may know, last week I imposed new tariffs on some Japanese products in response to Japan’s inability to honor its trade agreements with us regarding electronic devices called semiconductors. Now, imposing such tariffs and trade barriers and all kinds of restrictions are measures that I don’t want to take. And I’ll get to the sound economic reasons for this in a moment. That is, in the long run, such trade barriers hurt all American workers and consumers. However, Japanese semiconductors were a special case. We had clear evidence that Japanese companies were engaging in unfair trade practices that violated the Japan-U.S. agreement. We expect our trading partners to honor their agreements. As I often say, our commitment to free trade is also our commitment to fair trade.
But you know, in imposing these tariffs, we weren’t starting a trade war, we were just trying to address a specific issue. So next week, I will convey this same message to Prime Minister Nakasone. We want to continue to work together on trade issues and are keen to lift these trade restrictions as soon as the evidence allows. We want to do this because we feel that both Japan and the United States have an obligation to promote the prosperity and economic development that only free trade can bring.
Now, the message of free trade, which I delivered to Canadian leaders a few weeks ago, was warmly received there. Indeed, around the world there is a growing recognition that the path to prosperity for all nations lies in rejecting protectionist laws and promoting fair and free competition. Now, there is a solid historical reason for this. For those of us who lived through the Great Depression, the memories of the suffering it caused are deep and searing. And today, many economic analysts and historians argue that the high tariff bill passed at the time, known as the Smoot-Hawley Tariff, greatly worsened the recession and hindered economic recovery.
When someone says, “Let’s put tariffs on foreign imports,” at first it seems like they’re doing something patriotic: protecting American products and jobs. And sometimes it works for a short period of time, but only for a short period of time. Here’s what ultimately happens: First, domestic industry becomes dependent on government protection in the form of high tariffs. They stop competing and making the innovative management and technological changes necessary to succeed in global markets. And while all this is happening, something even worse happens. High tariffs inevitably trigger foreign retaliation and violent trade wars. The result is ever-increasing tariffs, higher and higher trade barriers, and lower and lower competition. So soon people stop buying because the price is set artificially high by tariffs that subsidize inefficiency and poor management. And then the worst happens. Markets shrink and collapse. Businesses and industries will be closed. And millions of people will lose their jobs.
All this memory of what happened in the ’30s made me determined, when I came to Washington, to keep prosperity-destroying protectionist laws from being applied to the American people. Now, it wasn’t always easy. There are people in Congress who, just as they did in the ’30s, seek quick political advantage, risk American prosperity for short-term appeal to some special interest group, and forget that over 5 million American jobs are tied directly to overseas export operations, and millions more are tied to imports. Well, I’ve never forgotten those jobs. And on trade issues, we’ve generally done well. While we have taken steps to prevent unfair practices against American products in certain specific cases, such as Japanese semiconductors, we remain committed to our fundamental, long-term commitment to free trade and economic growth.
Therefore, as the meeting with Prime Minister Nakasone and the Venice Economic Summit approach, it is critical that the President’s options are not limited in these trade deals with foreign governments. Unfortunately, some in Congress are trying to do just that. We will keep you informed about this dangerous law. Because this is just a form of protectionism, and we might need your help to stop it. Remember, American jobs and growth are at stake.
Until next week, thank you for listening. God bless you.
