ILMA Compoundings May 2018 - 43

efforts in the 1990s, for guidance in
getting China to open up its markets
and play by international trade rules
(e.g., intellectual property). Like
China today, Japan back then had
a significant trade surplus with the
U.S., used its trade policies to create
significant global companies (e.g.,
Sony, Toyota and Nissan), and sought
U.S. technology any way it could.

The possibility
of an all-out
trade war with China
has spread trepidation
among the ranks of U.S.
manufacturers, including ILMA members."

are worried about trade disruptions or
other international conflicts (e.g., Syria)
curbing growth while increasing raw
material and finished lubricant prices.
Crude oil prices have continued to
increase with the recent global unease.
The Trump administration has been
studying President Ronald Reagan's
trade battle with Japan in the 1980s,
along with President Bill Clinton's

Reagan and Clinton relied on
Section 301 of the U.S. Trade Act of
1974 to carry out their Japan trade
strategy. Trump also is using this law
with China. Section 301 authorizes
the president to use tariffs and other
retaliatory means to address trade
disputes. Few people remember that
Reagan also tried using Section 301
to threaten tariffs against India unless
the country opened up its insurance
market. India refused to negotiate,
and the U.S. eventually backed down.
Japan delayed, but it eventually
accommodated U.S. demands without
imposing retaliatory tariffs, in part
because Japan needed the American
military to protect it from China.
Japan de-escalated trade tensions by
agreeing to build car and electronics
factories in the U.S.

The current trade fight with China
is different. China could be more like
India. China is targeting sympathetic
parts of Trump's political base, such as
farmers, with retaliatory tariffs. Domestic opposition to tariffs and retaliatory
actions by the Chinese government
likely will blunt Trump's trade plans.
China could make a trade war costly
enough that the U.S. will back down.
Every president believes that the
U.S. has the advantage in trade fights,
but most occupants of the White
House since Thomas Jefferson have
overestimated or overplayed their
hands. Jefferson's plans to embargo
British exports in the early 1800s
backfired. Buckle your seat belts for
the next few months' ride.
By the way, Stoessinger passed away
last November at age 90. During his
presentation to ILMA, he related his
personal story of fleeing Nazi-occupied
Vienna and Prague, emigrating with
his mother across Siberia to Shanghai through the help of a Japanese
diplomat who disobeyed orders. He
stood yards away from Hitler on two
occasions and saw evil face-to-face. A
U.S. soldier who helped liberate China
encouraged Stoessinger to come to
America to study. Stoessinger did his
doctoral work at Harvard with Henry
Kissinger and Zbigniew Brezezinski.
"Do the right thing" was the common
denominator that saved his life. Thank
you, Dr. Stoessinger, for enriching
both ILMA and me.
Leiter serves as general
counsel to ILMA, representing
the Association since 1981.
He may be reached at
202-466-6502 or jleiter@bmalaw.net.

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