That we live in a global economy is by now a truism, obvious to anyone who thinks about it for a moment -- 70 percent of all American-made products now face import competition.
The greater that global interdependence becomes, the more often presidents and Congress will have to choose between consumers on the one hand, and U.S. manufacturing companies and their employes on the other.
That is the choice that faces President Reagan. By March 31, Reagan will have to decide whether to continue the so-called "voluntary restraints" that are limiting Japanese auto imports to 1.96 million cars for the year ending in March (1.85 million is the official limit -- the rest enter through various backdoor channels).
His chief advisers on the issue, the members of the Cabinet Council on Commerce and Trade, have concluded that the import restraints should not be extended after April 1.
That decision would almost certainly lead to a surge in Japanese imports, but not necessarily led by Japan's big three, Toyota, Honda and Nissan. It is the manufacturers of other Japanese models -- Mazda, Subaru, Isuzu and Suzuki -- that are likely to try the hardest to stake claims in the American market, since they are now restricted to minuscule shares under the voluntary agreement.
Lifting the agreement April 1 would give them a precious opportunity to establish a presence here in case the door begins to close again.
The way these lesser-known Japanese cars would compete is by cost, dropping the price of subcompact cars to a point the U.S. producers could not begin to match and make a profit.
The immediate break for consumers would be a larger supply of less expensive cars. They would come not only from Japan companies, but also from General Motors Corp., Ford Motor Co. and Chrysler Corp., which would step up their imports from Japan, Korea and Mexico to keep pace with the Japanese competitors.
Unquestionably, stepped-up imports would cut more deeply into the ranks of American autoworkers, although the magnitude of the job losses are hard to gauge. That spells more hardship for autoworkers, their families, and the plant towns where American cars are built.
It is a trend that General Motors, Ford and Chrysler -- and the United Auto Workers' leadership -- have already accepted, however reluctantly.
The relentless pressure from low-cost imported cars compels the American auto makers to automate wherever they can, reducing the costs of human labor as much as possible. GM hopes to build the small car of its future -- the Saturn -- with just 60 worker-hours per car, less than half the current 130 worker-hours required to build a car in Detroit.
There is no chance of arresting the decline in the ranks of U.S. autoworkers or in stopping the erosion of the U.S. companies' market share, just as there was no way that the older plants in the U.S. steel industry could withstand the onslaughts from foreign producers whose technology matched or exceeded the American steel-making techniques, and whose labor costs are one-quarter to one-tenth of U.S. levels.
The question is how fast and how far that erosion in the auto industry proceeds and whether it is worth it for the economy as a whole to reduce the damage by keeping out Japanese cars.
Stated that way, the arithmetic favors an end to restraints and an open door to lower cost imports.
What makes Reagan's decision so fearsome politically is a growing view that the U.S. side is not just losing a fair fight over costs and technology, but also is being victimized by the economic policies of this administration and Congress, and by unfair, predatory trade practices by its foreign rivals.
There is a deepening conviction among business leaders as well as union chiefs that the U.S. manufacturing losses are attributable in large part to foreign government subsidies that lower import costs and to unfair trade restrictions that keep competitive American products out of foreign markets. Trade barriers are keeping $10 billion in American products out of the Japanese market every year, the administration estimates.
More devastating than the trade restrictions are the effects of an overvalued dollar. According to U.S. Trade Representative William Brock, "The explosion in the price of the dollar has made life more difficult than all the trade barriers in all the countries of the world put together."
There is no relief in sight for the dollar. And that means that the only outlet for the anger and frustration of U.S. manufacturers and their employes is the issue of fair trade.
If Reagan does allow the auto import limits to end next month, he will somehow have to use that decision as leverage to persuade the world's other trading nations that they risk a destructive political backlash if they ignore the fairness issue.