The formal smiles are fading fast. Until now the trade relationship between the U.S. and Japan has been handled with relative congeniality, especially considering the rising tensions on each side. Practically every potential crisis has been forestalled with cool-headed talks and bilateral agreements. But what seemed at worst a spirited competition between two trade giants last week escalated into a confrontation that could, if not handled carefully, develop into an old-fashioned trade war. In an extraordinary change of tone on the controversial issue of trade with Japan, the Reagan Administration announced plans to impose drastic 100% duties on several Japanese products,...
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