Question

President Bill Clinton attempted to protect American firms from foreign competition by placing a government tax on Japanese automobiles imported to the United States. President Clinton's goal was to raise the price on Japanese imports, thereby encouraging American consumers to purchase American-made automobiles. The tax the President threatened to impose is an example of a __________.

Answer 1

Answer:

import tariff

Explanation:

Actually during the 1990s Japanese cars were subject to import quotas and luxury Japanese cars (13 models) were threatened with a 100% import tariff. Since 1981 until the mid 1990s, total Japanese cars imported to teh USA were limited to 1.68 million per year.

The import quotas resulted in Honda building cars in America and later Toyota followed (now Nissan, Mazda, and Subaru have factories in America). We can say that the policy was successful, since at least the cars were built domestically.

The problem with the import tariffs is that they wouldn't help American industries, the companies that would have benefited were BMW and Mercedes Benz. Lexus and Accura are not even similar to Cadillac and Lincoln, so they are not competitors. Japanese luxury cars compete against German luxury cars, and that was something both governments ended up realizing. It was more of a blackmail in order to increase American exports to Japan than actually axing the cars, since the US knew that the tariffs were illegal (the WTO had warned them already) and they also knew they wouldn't benefit American car manufacturers. The problem with American cars in Japan is that they were not adapted to Japanese roads (they drive on the other side of the road) and they were too large. That is the same problem with European roads, that is why currently only Ford sells cars in Europe, GMC sold its European divisions and Chrysler (even though Italian) didn't sell cars there either.