“We’re going to see first what happens to the yen in foreign-exchange markets,” says an administration official. It should go up against the dollar in the wake of the trade stalemate, analysts say. This, in turn, should make it tougher for Japanese exporters, who, the administration hopes, will then bring pressure on the Japanese government for concessions.
Clinton also expects action in Congress, says the administration official. House Majority Leader Richard Gephardt and Montana Sen. Max Baucus are ready to introduce punitive legislation, perhaps establishing the kind of trade goals the administration hoped to negotiate. If Hosokawa still won’t compromise, Clinton will act, the source says.
The president could, under the 1978 Economic Powers Act, impose a blanket tariff on all Japanese exports. More likely: a move under “Section 301” of U.S. trade law to propose duties on carefully targeted Japanese products such as auto parts and telecommunications devices. Action could come as early as this week, says a U.S. official.
