As a follow-up to a recent post regarding the institution of a free-trade agreement between the U.S. and Japan, a November 29, 2011, article published on bloomberg.com reveals that the modification of international tariffs is not the only factor playing a role in the Japanese automobile industry, not to mention the entire Japanese economy.
Upon reading the article one is left with a feeling of deja vu. Talk of historic inflation rates, bail-outs and stimulus packages is all to familiar to Americans. Now, its apparently Japan's turn to go through the same cycle. The Yen is reaching historically high inflation rates - comparable to post WWII rates that were the country's highest ever - and company's as large as Toyota are feeling the crunch. The company's president, Akio Toyoda, even said that his company “will collapse” unless the currency weakens. While there seems to be added stability to the U.S. automobile industry at the moment, it leads one to wonder how effective, in fact, were the changes and aide given to U.S. automakers and will the industry continue to improve in the long run? Now, with Japan in a very similar position, what is their best plan of action? Is a short-term solution the key or should long-term adjustments be made?