Reagan Urges Congress to Avoid Tariffs : Protectionist Measures Won’t Work, Risk Trade Wars, He Says
President Reagan warned Congress on Saturday against passing “dangerous legislation” that he said could start a trade war and lead eventually to a steep decline of U.S. industry, casting millions into unemployment.
Reagan said in his weekly radio address, delivered from Camp David, Md., that he wants to remove his own restrictions on Japanese semiconductors as soon as Tokyo complies with a trade agreement.
On April 17, Reagan imposed a 100% tariff on some Japanese color television sets, computers and power tools. But in his radio address, the President, speaking less than a week before a scheduled visit from Japanese Prime Minister Yasuhiro Nakasone, said that imposing tariffs is a step “I am loath to take,” adding that tariffs work “only for a short time.”
The President said that, eventually, industries rely too heavily on trade protection and “stop competing and stop making the innovative management and technological changes they need to succeed in world markets.”
‘Markets Shrink, Collapse’
Continuing his portrait of dire consequences from tariffs, Reagan said that because they “subsidize inefficiency and poor management, people stop buying.” Then, he said, “the worst happens. Markets shrink and collapse. Businesses and industries shut down, and millions of people lose their jobs.”
Reagan called his own imposition of tariffs on semiconductors “a special case,” asserting that there was “clear evidence” of Japanese violations of the pact.
But in the Democrats’ broadcast response, Rep. Richard A. Gephardt (D-Mo.), a presidential candidate and the sponsor of a trade measure to be voted on in the House this week, accused the President of “switching signals faster than a stoplight and leaving American workers stuck in the intersection.”
He said that while the U.S. trade deficit was reaching $170 billion last year, the United States lost 2.5 million jobs in 1986 “in part because other countries are stopping us from selling our products in their markets.”
Retaliation, Trade Wars
In his five-minute speech, Reagan repeated his contention that protectionist legislation in Congress would lead to retaliation by other countries, triggering “fierce trade wars.” Also, he said that such legislation would hurt him in his talks with Nakasone this week and during the coming Venice economic summit, calling it “terribly important not to restrict the President’s options” in these dealings.
But Gephardt said that foreign competitors take Americans “for patsies and chumps” because the Administration’s trade policy is “all talk and no action.”
He promoted his trade measure as a way to give America “the teeth we need in trade negotiations.” Gephardt has proposed an amendment to a comprehensive trade bill that would require the President to retaliate against nations that refuse to reduce their trade surpluses by a set amount annually.
