Restrictions on American Imports of Japanese Autos - Essay Example

The financial problems of GM (which were made worse by increased Japanese competition), did facilitate giving an incredibly large sum of bailout money to them. According to most analysts, GM is showing signs of a strong recovery, but how they will fare in the long run remains to be seen.Personally, I don’t think it is a good thing to be totally dependant on a foreign producer of cars, but at the same time, the government shouldn’t be subsidizing a company just to make sure it stays alive.

Car companies and other entrepreneurs are perfectly capable of competing with foreign markets; they just need more competent leaders to find ways to increase efficiency. Ford and Dodge didn’t need a bailout and they are still competitive so why was it so important to keep a struggling business alive? It’s not as if GM was the only American car company left.As far as production goes, it would probably be a good idea to imitate Japanese automakers since they seem to have a competitive edge over American made cars.

If American automakers can’t succeed in this then they probably don’t deserve to be in business and, economically speaking, would be better off looking for something where there is a competitive advantage to be had.As far as tariffs and quotas on Japanese automobiles are concerned, a tariff is better than a quota because a tariff generates revenue for the government and a quota does not. Also, tariffs are less likely to lead to corruption and smuggling. For instance, if a country wants to import 10,000 and a quota only allows for 5,000 the government would determine which suppliers would be left out.

This could lead to government officials “playing favorites” and getting kickbacks from suppliers. We have seen in the past how as foreign companies raise their prices to pay for tariffs the American companies follow suit and raise their prices as well. It is definitely a danger that Americans will be completely dependent on foreigners for cars, so a tariff can often serve a good purpose in reducing competition. U.S. car companies are capable of surviving, maybe not without any protection, but certainly with minimal protection.

The most important thing is for American automakers is to find ways to be more competitive in the global market. The government should play a minimal role in helping American automobile companies if only to prevent them from going extinct. The real responsibility for keeping American auto companies competitive lies with the management teams of those companies.