Word: importance
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Dates: during 1970-1979
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What does the program mean for U.S. business? There may well be important gains for many firms, especially in the auto industry. The President almost set up Detroit as the proving ground for his plan. The excise-tax cut will undoubtedly boost demand for new cars, and the import surtax (or the currency revaluations that it is designed to bring about) will make U.S. automakers' lowest-priced models competitive with Volkswagen and other big-selling imports for the first time in a decade. In Detroit, Ford President Lee lacocca beamed: "This makes Nixon's trip to China look like child...
Ironically, the momentary result of Nixon's announcement was to fire up foreign-car sales. Customers poured into the showrooms of Toyota, Volkswagen and other import dealers, quickly buying models that would soon become relatively more expensive. "People were still shopping at 11 o'clock at night," said suburban St. Louis Datsun Dealer Ed DeBrecht. Dealers of U.S. cars, on the other hand, were left wondering how to get rid of a huge inventory of 1,900,000 '71 model cars. With prices on the '72 models expected to be almost identical (less excise), the soon-to-be-outdated...
...IMPORT SURCHARGE. Otto Eckstein predicts that "the import surcharge will encourage a worldwide revaluation of currencies, particularly by Japan and the Common Market. Now the U.S. can really become competitive in trade, and it is the efficient companies-here and abroad-that will win." On the other hand, Robert Triffin issues a warning that: "There is a real danger that a trade war will break out. The Common Market has a deficit in trade with the U.S., and the import surcharge can only deepen...
...increase its exports, since American-produced computers, heavy machinery, jet planes, farm goods and other items will now be cheaper overseas. Over the long haul, the dollar devaluation will benefit countries from which the U.S. buys goods because Americans will have to pay more dollars for the things they import. In the short run, however, countries such as Germany and Japan, which now hold $27 billion as part of their national reserves, will take a beating. The value of their dollar assets is expected to shrink, perhaps by as much as 12% to 15%, as the prices of their...
...justify the surtax, the U.S. has cited GATT Article 12, which allows temporary restrictions in case of severe balance of payments deficits. But the provision permits only quotas, not surtaxes. Thus, the U.S. is relying largely on a precedent set by Britain in 1964 when it posted a 15% import surtax (later reduced to 10%) and kept it for two years...