October 03, 2018

Horse 2472 - The Art Of The Incompetent Deal

U.S. President Donald Trump reached an agreement with Japanese Prime Minister Shinzo Abe to open trade talks between the two nations.
Abe resisted for almost two years the push to start bilateral trade talks with its second-largest trading partner, but Trump’s threatened auto tariffs forced him to reconsider. The two countries have agreed that sanctions on auto exports won’t be applied while the talks take place, Abe told reporters.
The U.S. wants to expand access for its automobile exports to encourage more production and jobs in America. In agricultural goods, Japan won’t offer better conditions than already exist in its other trade agreements, according to a joint statement by the two nations. 
- Bloomberg, 26th Sep 2018.

After reading James Comey's book A Higher Loyalty: Truth, Lies and Leadership, I am convinced more than ever that the 45th President of the United States is unfit for the office, by virtue of the material changes that Twenty-fifth Amendment to the United States Constitution made; namely his Inability to discharge the Powers and Duties of the said Office. It is my opinion that although Trump has been elected to the office, he is unfit to discharge the Powers and Duties of the said Office due to reasons of complete incompetence.
This is the worst administration of my lifetime and I suspect probably either the second, third or fourth worst ever, if you consider the examples of Warren G. Harding and the Teapot Dome scandal, Richard Nixon and the Watergate affair, but not worse than James Buchanan whose complete failure to address the issues of slavery and the secession of the southern states, snapped the nation in half.
Trump seems more concerned with photo ops than actually making policy; this was obvious on his trip to see Kim Jong-Un, when nothing material was achieved; with his visits to the UN; and his ongoing dispute with NAFTA.

I find Abe's dealings with Trump on the subject of automobile tariffs to be both shrewd and dare I say sneaky because it is easy to deal with someone who has no idea what they're doing. Abe, who previously held the office of Prime Minister from 2006-2007, has on this run held the position since 2012; he seems to be somewhat popular.
If anything, Abe and Abenomics seems to hold that Japan will be more competitive if it engages in more free trade; hence Japan's wishes to push for the Trans-Pacific Partnership and a wish to pull back the influence of Japan's agricultural co-operatives. By the same token, Abe realises that by opening up trade, he will be able to find bigger markets for Japan's automotive products; and as any decent economist should know, there is usually better terms of trade for elaborately transformed manufactures than simple ones.

The thing I find utterly baffling with Trump wanting to talk to Japan about opening markets for its automobile exports and the secondary objective of trying to encourage more production and jobs in America, is that it assumes that America is selling something that Japan wants to buy. I just don't think that there's any real world evidence for that.
The real problem in trying to gauge what the Japanese Domestic Market wants for itself as opposed to the headline acts that it proclaims is that as an outsider I don't even know where to begin to look. The big three motor manufacturers of Japan are Toyota, Nissan, and Honda, and their websites have stuff that I've never even seen before. As a baka gaijin looking inwards, all I can see are a host of Weird Japanese Things (WJT) and I don't know how they onto the regular boring world of Japanese traffic.
It was my experience as a tourist that there were a bunch of small cars, some of which were on roads in the rest of the world and some of which weren't, a lot of kei cars which take advantage of taxation regulations for cars under 660cc and only a very select few cars which were the sports cars and halo cars. The idea of an SUV like you see on roads in America or Australia, simply wasn't viable because of the problem of parking said vehicle when not in use and the price of petrol which wasn't exorbitant but it wasn't conducive to these things either.

In Australia, if you ignore the Ford Ranger and Toyota Hilux which have more or less supplanted the Holden Commodore and Ford Falcon, then the cars which are the most popular are the Toyota Corolla, the Mazda 3 and Hyundai i30. These things are significantly smaller than the volume sellers in the United States which are now the Ford F-150, Toyota Camry, and Chevrolet Silverado. Ford is starting to sell more cars like the Ford Edge and both Ford and GM have made plans to abandon the sedan and hatchback class entirely by 2022 in favour of SUVs and pickup trucks. The cars that American automakers primarily want to build are for America and if they're already bigger than the traffic on Australian roads, what possible hope do they have in Japan?
It probably goes without saying that the big SUVs that America wants to sell in America have no market whatsoever in Japan and that makes Trump's declaration all the more ludicrous. When the big three automakers in America voluntarily move away from building hatchbacks and sedans, in favour of SUVs then unless they intend to start building the equivalent of WJTs, then they have no hope at all.

I suppose that a company like Ford might be able to sell the Fiesta in Japan and will be freed to do so in future because Ford and Mazda have gone through a divorce and so the noncompeting product clauses in their agreements probably no longer apply however, the Fiesta is not built in the United States and will cease to be sold there in future. Likewise, General Motors could possibly sell the Spark/Sonic/Barinas in Japan but they aren't made in the United States either.
At any rate, the Fiesta and Sonic which are currently sold in the United States are built to a somewhat lower price point than what would be sold in Japan. The Mazda Demio/2 DJ which I own is a Hofu built car which is primarily a JDM car and then sold in right hand drive markets; and it has the most comprehensive list of kit for a car that I have ever owned and it is the base model. Granted that a car like the Nissan March can be deoptioned to a very Spartan list of kit but even an austerity spec March is still very nice indeed.

I'm afraid that I need this explained to me as though I were a child because there's something fundamental that I simply don't understand. It's all very good trying to open up new markets but if you have nothing to sell, then what's the point? It could just very well be that my initial assessment that Trump's complete incompetence is so much on display here is correct and that as a sane person I am actually overqualified to understand because right now, I don't get it at all.

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