How the Japanese handled US tariffs directly relates to the potential Chinese reaction to Trump’s plan to hit them with even higher tariffs next year. The reaction impacts not just the activity in the US market but also spills over into the broader global market. It impacts the ability of other countries to compete with Chinese exports and Chinese products in the Chinese dosmetic market.
When US innovation stagnates, tariffs are imposed to protect inefficient local industries. This move is not a new phenomenon. The tariffs proposed by President-elect Donald Trump harken back to his youth when the same method was applied to Japan to stop the rising number of Japanese imports into the US.
Even the same arguments were used: The Japanese were stealing US intellectual property, Japanese industries were state-subsidised, wages in Japan were lower, and the Japanese were dumping products on the US. At that time, Japan was not taking away jobs from the US because US companies were not encouraged to operate joint ventures, so there was no exodus of US companies to Japan. However, that is what is happening with China now.
