FOREIGN TRADE -- and specifically trade with Japan -- seems to be emerging as the central issue in this early phase of the next presidential election. Sen. Robert Dole offered a few sharp remarks yesterday on the possibility that a "limited" trade war might be required to focus Japanese attention on American complaints. The trouble with a limited trade war, like other kinds of limited war, is that it sometimes runs beyond the limits. But Sen. Dole was trying to tell the Japanese that if they fail to work toward reasonable solutions, they risk highly unreasonable solutions.

The senator offered that thought on a day that provided a rich and full display of horrible examples of what might come next. The steel industry was back in town, shrieking as usual about the awful injustice of allowing effective competition into the American market. Earlier this fall, in response to steel imports from Europe, the Reagan administration extended the European steel cartel and its market-sharing formula to the United States. It was hardly a triumph for the principles of the free market. But the cartel covers only European steel, and now the American companies want similar protection from the Japanese producers. If they get it, you will presently begin hearing from them about the unfairness of competition from Korea, Taiwan, Mexico and so forth.

Meanwhile, the two houses of Congress were debating other sorts of restrictions. Should the steel and concrete for federally aided highway repairs be limited to American products? Should Toyota and Datsun automobiles be barred from this country under a local content rule? Both of these ideas are utterly misguided. But if they aren't enacted this month, they will be back in January, big as life, in the next Congress.

What should Japan's new government do? First, it needs to begin negotiating, seriously and rapidly, on some of its own highly visible import restrictions. Mr. Dole mentioned the Japanese quotas on beef and citrus fruit. Second, and much more important, it needs to ensure that the recent rise of the yen's exchange rate continues. Japan has to accept the truth that it is impossible for other countries, suffering very high unemployment at home, to allow Japan to maintain its own economic growth courtesy of an undervalued currency. When the yen approaches its true trading value, Japan will find that the political tension with its friends and allies has been correspondingly reduced. Japan is being asked to accept lower growth, in a time of world recession, as its contribution to the preservation of an open system of world trade. The prospects for a real economic recovery--whether in Japan, Europe or North America--depend crucially on keeping that trading system open.