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Want to Understand How Trump’s Tariffs Will Hurt the US Economy?
Then, you must understand how Ronald Reagan’s voluntary export restraint failed.
The reality of Trump’s tariffs is sinking in, and some formerly clueless Trump supporters are learning how the tariffs will work against their economic interests. History is chock full of examples of how bad tariffs can be. A not-so-recent example we can learn from is how a threatened tariff in 1981 by newly elected Ronald Reagan cost American consumers billions and significantly skewed the growth of the American automobile industry.
After being elected, Reagan vowed to help the struggling U.S. auto industry fight off the rising competition, most significantly from Japan, Germany, and other rising economies. Japan had started flooding the U.S. market with low-priced, high-quality cars that appealed to struggling Americans. I recall my mother buying a Honda Civic in 1979, her first car since my parents divorced, and a sign of her rising independence. It was small, inexpensive, well-built, had a great radio, and needed almost no servicing, unlike the U.S.-made gas-guzzling behemoths. While older Americans disliked the “cars that help the enemy,” as my World War II veteran uncle called them, struggling young families found that purchasing such reliable, compact cars was a coup for…