In the fight over whether to allow Japan into the ongoing Trans-Pacific Partnership (TPP) trade talks, a key defense by the Japanese automotive industry against complaints by the “Detroit Three” about Japan’s closed auto market has been to cite the success of European automakers that have made bigger inroads there.
Policymakers in Washington have rediscovered the importance of making things. But what should we make?
A second, more formidable, hurdle will be the dramatic U.S.-Japan trade imbalance in the auto sector. In 2010, Detroit exported 14,000 cars and light trucks to Japan, while Japanese automakers shipped 1.5 million units to the United States. Japan imposes no tariffs on imported cars. So elimination of duties in a TPP agreement would be of no help to American automakers hoping to sell more vehicles there.
