Winston has studied the impact of one of Reagan's first trade tactics against Japan -- a quota imposed in 1981 on the number of Japanese cars that could come into the U.S. every year. It was meant to give American car companies like Ford (
F), GM (
GM)and Chrysler (
FCAU) some breathing room from foreign competitors like Toyota and Nissan.
It came at a time when the U.S. economy was in recession in the early 1980s, unemployment was rising towards 10% and inflation was high. U.S. companies were looking for any help they could get.
One result of the new trade restrictions against Japan was that American car companies hiked up car prices, pulling in record profits at the time, Winston found. They didn't have to fear losing customers to Japanese car companies.
U.S. car makers also lowered production in 1984 to help boost car prices. Less production meant fewer workers: America lost over 60,000 auto jobs between 1982 and 1984 due to the trade restrictions, according to Brookings.
Consumers got hit hard. The average car price rose by about $1,000 at the time.