JUntil 2017, US trade policy was aligned with its strategic objectives. They were the world’s leading economy, the world’s leading military power, and their alliance with European countries and others enhanced their security and underpinned prosperity for all. They exercised global leadership through institutions such as the World Trade Organization, ensuring a common legal framework conducive to economic growth and international trade.
Then came Donald Trump, who ushered in an era of protectionism, unnecessarily alienating many friends and allies. His successor, Joe Biden, tried to at least partially repair the damage, but without going back on many key elements of Trumpian trade policy.
Washington’s policy towards Japan, one of its most important allies, is a good illustration of this. The security of this country has depended on America since the end of World War II. When Shinzo Abe was Prime Minister, Japan strengthened its military capabilities and showed a greater willingness to defend its allies and its strategic interests in the region, especially Taiwan, but it still needs the American umbrella.
Two “lost decades” of stagflation
Japan is also very dependent on trade, and plays an essential economic role in Asia and the rest of the world. And now that China is flexing its muscles, Japan’s role has become as important geopolitically as it is commercially.
Japan was a relatively poor country before World War II, and because of the large-scale destruction suffered, it emerged from the war even poorer. But, at the end of the 1950s, the reconstruction of the country and an appropriate economic policy ushered in thirty years of phenomenal growth.
By the 1980s it had become an economic power, which led other countries to take protectionist measures against it. This was the case of the “voluntary” restriction on the export of vehicles produced in Japan, actually imposed by the Reagan administration. [président des Etats-Unis entre 1981 et 1989].
The Japanese economy nevertheless continued to grow strongly. But its three-decade expansion had inflated a financial bubble that eventually burst in 1990, ushering in two “lost decades” of stagflation. The global financial crisis of 2008-2009 dealt a further blow to the economy. Over the next decade, its growth rate increased only slightly, before declining again with the Covid-19 pandemic.
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