The Indicator from Planet Money The old trade war that brought foreign carmakers to the U.S.
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May 21, 2025 Explore how a trade war in the 80s revolutionized U.S. car manufacturing. Discover the shift from American muscle cars to fuel-efficient Japanese imports sparked by an energy crisis. Learn about Ronald Reagan's trade policies and their influence on U.S. auto industry negotiations. Understand how historical dynamics shaped today's automotive landscape and the ongoing implications for job security and global trade strategies.
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1970s Muscle Cars vs Japanese Efficiency
- The 1970s saw American muscle cars with big engines and poor fuel efficiency.\n- Japanese fuel-efficient cars like the Toyota Corolla found an opening during the oil crisis.
Reagan's Tariff Strategy Workaround
- Reagan opposed tariffs but used their threat as leverage in negotiations.\n- Japanese carmakers agreed to voluntary export restraints to avoid tariffs.
Foreign Cars Built in America
- Foreign automakers opened many factories in the U.S. during the 1980s.\n- Japan’s Honda, Germany’s Mercedes, and others localized production to maintain market access.