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My American friends:
Japanese Prime Minister Nakasone will visit me at the White House next week. This is an important visit because, while we expect to maintain our generally excellent relations with our good friend Japan, the recent disputes over trade between the two countries will also be high on our agenda.
As you may have heard, last week I imposed new duties on some Japanese products in response to Japan’s failure to implement its trade agreement with us on electronic devices called semiconductors. Now, these types of tariffs or trade barriers and the imposition of restrictions of any kind are steps I am loathe to take. I’ll talk about the solid economic reasons for this in a moment: In the long run, such trade barriers harm every American worker and consumer. But Japanese semiconductors were a special case. We had clear evidence that Japanese companies were engaging in unfair trade practices that violated the agreement between Japan and the United States. We expect our commercial partners to comply with their agreements. As I often say: Our commitment to free trade is also our commitment to fair trade.
But, you know, when we implemented these tariffs, we were just trying to solve a specific problem, not start a trade war. So I will give the same message to Prime Minister Nakasone next week: We want to continue to work collaboratively on trade issues, and we very much want these trade restrictions to be lifted as soon as the evidence allows. We want to do this because we think that both Japan and the United States have an obligation to promote the prosperity and economic development that only free trade can bring.
I delivered this free trade message to Canada’s leaders a few weeks ago, and it was warmly received there, too. Actually, There is a growing awareness around the world that the path to prosperity for all nations lies in rejecting protectionist legislation and promoting fair and free competition. Now there are solid historical reasons for this. For those of us who lived through the Great Depression, the memory of the suffering it caused is deep and searing. And today, many economic analysts and historians argue that the high tariff legislation enacted at that time, called the Smoot-Hawley tariff, greatly deepened the depression and hindered economic recovery.
You see, at first When someone says, ‘Let’s put tariffs on foreign imports,’ it seems like they’re being patriotic by protecting American products and jobs. And sometimes it works for a short time, but only for a short time. What ends up happening is this: First, domestic industries begin to rely on government protection in the form of high tariffs. They stop competing and stop making the innovative management and technological changes they need to succeed in world markets. And while all this is happening, something even worse happens. High tariffs inevitably lead foreign countries to retaliate and trigger violent trade wars. The result is more and more tariffs, ever higher trade barriers, and less and less competition. So soon people stop buying because of prices artificially raised by tariffs that subsidize inefficiency and mismanagement. Then the worst happens: Markets shrink and crash; businesses and industries closed; and millions of people are losing their jobs.
The memory of all these events in the ’30s made me determined when I came to Washington to protect the American people from protectionist laws that were destroying prosperity. Now this wasn’t always easy. There are those in Congress who, just like in the ’30s, want to gain quick political advantage, risking America’s prosperity for the sake of a short-term appeal to some special interest group, forgetting that more than 5 million American jobs are directly tied to foreign export business, and additional millions are tied to imports. I never forgot those things. We also generally did well on commercial matters. In some select cases, such as Japanese semiconductors, we have taken steps to stop unfair practices against American products, but we still maintain our fundamental, long-term commitment to free trade and economic growth.
As my meeting with Prime Minister Nakasone and the Venice economic summit approaches, it is extremely important not to limit a president’s options in such trade deals with foreign governments. Unfortunately, some in Congress are trying to do exactly that. I will inform you about this dangerous law because it is another form of protectionism and I may need your help to stop it. To remember, America’s jobs and growth are at stake.
Until next week, thanks for listening and God bless you.
