Trade War Watch 12: "Nationalist assault on a foreign corporation, an economic war"

Recently, there have been voices that mentioned that the attacks on Toyota could be politically motivated. Let’s face it: Toyota has problems. So have other auto makers. There are marked differences in reaction to and treatment of these problems.

One of the tenets of warfare is that you never attack the innocent. You wait until your opponent bumbles. Tricking an “enemy” into doing something really stupid, and exploiting this to declare a “righteous” war, is as old as Julius Caesar. Being the “defender” makes you a winner in the war of public opinion. You need the public on your side to win a war.

Using an outside scapegoat to deflect criticism is the oldest trick in the book. Time and again, people fall for it.

The Japanese were docile, polite, and cautious when in came to Toyota’s troubles. The more surprising is today’s piece in the Nikkei [sub]. Usually, we don’t copy and republish whole pieces. But in the name of authenticity, and because the Nikkei is only available on-line as paid subscription, we make the whole piece available.

„Toyota’s Woes Seen As Warning Sign For Foreign Firms In U.S.

WASHINGTON (Nikkei)–The midterm elections this coming November may be one reason why the U.S. government and Congress have taken a hard-line stance on Toyota Motor Corp. (7203) over vehicle defects.

Toyota itself undeniably compounded the problem by bungling its response. But the fact that the Japanese auto giant has sharply increased its market share in the U.S., while General Motors and Chrysler headed for bankruptcy, provoked a strong reaction to its vehicle problems.

Another likely reason for the government’s tough response now is that the Department of Transportation was criticized by some consumers as too lenient.

Last month, U.S. President Barack Obama used his State of the Union address to put forth his vision of reviving American manufacturing and doubling exports — a move seen as an attempt to reverse his sinking approval rating ahead of the midterm elections.

With unemployment stuck at high levels and public anger over the Wall Street bailout still strong, the government and Congress are looking for a scapegoat to channel voter frustration away from themselves.

These circumstances prompt some U.S. watchers to warn that Toyota’s experience may be just a harbinger of a growing backlash against foreign firms.

Canada’s Financial Post made a similar assessment in a commentary titled “The war on Toyota” in its Feb. 3 online edition.

“The attack on Toyota, at this time of U.S. economic weakness and populist excess, is fast turning into a great American nationalist assault on a foreign corporation,” the piece read.

With the Japanese government also having bumpy relations with Washington right now over the relocation of the U.S. military’s Futenma base in Okinawa Prefecture, Toyota could be put into a very difficult corner over the quality problems.”

The Nikkei is not the only publication that takes this stance, in carefully chosen words. Publications on this side of the Pacific are more outspoken.

Canada’s Financial Post says:

“There can be little doubt that Toyota, the world’s greatest auto maker in recent years, has become the victim of much more than another typical out-of-control All-American media frenzy. When top-line political gamesman such as U.S. Transport Secretary Ray LaHood, Congressional pit bull Henry Waxman, and conniving United Auto Workers executives start piling on, this is clearly much bigger sport that the usual ritual public lynching of auto executives, a routine occurrence in Washington. The attack on Toyota, at this time of U.S. economic weakness and populist excess, is fast turning into a great American nationalist assault on a foreign corporation, an economic war.”

The Washington Examiner uses even harsher language:

“What is it about the automotive industry that inspires such thuggish attitudes in the Obama administration? The Examiner’s Michael Barone coined the term “gangster government” to describe threats by the White House last spring against Chrysler creditors who had the temerity to insist that bankruptcy laws be followed in the bailout of the perennially ailing third member of the once-fabled Detroit Big Three. Now along comes Transportation Secretary Ray LaHood muttering darkly that “we’re not finished with Toyota” in the controversy over sticking gas pedals in vehicles made and sold in America by the Japanese automaker… Keep the controversy going and odds are good that Toyota sales will continue to drop. The biggest losers besides American consumers will be the men and women who own and work at Toyota’s 1,200 U.S. dealerships and the 30,000 Americans who build Toyotas in its five factories here. LaHood might as well have said “Nice car company ya got there, be a shame if anything happened to it.”

Investors Business Daily says:

“Is it just us, or is there something off about regulators’ big public show against Toyota over a safety issue? Might that be a conflict of interest between Government Motors’ owners and a foreign rival?… LaHood’s targeting of Toyota is creepily reminiscent of the Japan-bashing of the 1980s. But it won’t work as long as Uncle Sam acts as both owner and regulator.”

You will find more, if you just take the time to sort through the chaff. Toyota is not the only target. Toyota is the most opportunistic target. The Obama administration has been on the trade war path ever since they took power. History tells that trade wars during recessions are suicide. Some trade wars turned into shooting wars.

Today, the world is too interconnected to survive a trade war. The first victims of Obama’s moronic tire war were American companies and American jobs.

Who will suffer most from trade wars?

You.

You pay for trade wars with higher prices. You pay for trade wars with inflation. You pay for trade wars by being forced to give up your freedom to pick the product you want. Don’t end up as collateral damage.