ABSTRACT
The US auto industry has struggled for the past fifteen years. The oil price shocks of the 1970s led to increased demand for small, efficient cars which domestic firms were unable to sell at their usual rate of profit. In response to the rapid growth of imports and the loss of domestic jobs in this industry, the US opted for trade protection in the early 1980s. The Japanese government agreed to a series of "Voluntary Restraint Agreements" (VRAs) which limited their auto exports to the US, and the US government also imposed a substantial tariff increase on Japanese small pickups. In order to be more effective, trade policy for the auto industry would have had to take into account the fact that there are a number of constituent groups who are both affected by and simultaneously determine the competitiveness of the domestic auto industry.
