HEADING FOR A CRASH

Trade conflicts between the U.S. and Japan normally follow a practiced ritual: first come the angry words, then the threat of sanctions, then more angry words, then the small gesture of reconciliation. But it seemed last week as if that ultimate stage might never be reached when the Clinton Administration slapped 100% tariffs on 13 Japanese luxury cars in the toughest trade showdown between the two countries in two decades. In unveiling the sanctions, which would double the sticker price of such models as Lexus and Acura when they take effect on June 28, Trade Representative Mickey Kantor declared that the U.S. would no longer "stand by and watch its workers and its products unfairly treated" by Japanese trade barriers to American autos and auto parts.

Japan refused to back down. Trade Minister Ryutaro Hashimoto, who once called Kantor "even more aggressive than my wife when I come home drunk," promptly lodged a complaint with the World Trade Organization in Geneva demanding that the tariffs be thrown out. Not to be outdone, the U.S. plans to ask the organization to rule that Japan's entire method of conducting trade is unfair.

Kantor's goal in this fight is to pry open the Japanese market for American-made auto parts -- everything from axles to mufflers to spark plugs. The U.S. claims that Japanese protectionism is evident from the fact that Japan has a 37% share of the U.S. parts market while American parts, which are of comparable quality, account for just 1.2% of the business in Japan. Hashimoto counters that it is not up to government officials to tell Japanese companies what products to buy and that any attempt to do so would violate free-trade principles.

Beyond the hot rhetoric, political pressures in both countries threatened to bar any immediate settlement. For a struggling President Clinton, the get-tough sanctions promised to shore up his support in crucial industrial states such as Michigan and Ohio. "No U.S. politician ever lost at the polls by bashing Japan," says trade expert Jagdish Bhagwati, a Columbia University economist. And the political price? "So we lose the Lexus and Infiniti vote," shrugs a senior Administration official. "It's a risk we're prepared to take."

In Japan, Hashimoto's hard line has played well, and his ambition to become Prime Minister could elude him if he appears to back down now. At the same time, his Liberal Democratic Party, which had governed Japan for some 45 years but is now only the largest faction in a coalition government, may no longer have the backroom clout to bring the country's powerful bureaucrats into a compromise that would avert a trade war.

Not surprisingly, U.S. automakers and many other large companies savored the Clinton Administration's moves. "The focus is on auto parts, but to a certain extent we all have the same problems with Japan," Robert Allen, chairman and chief executive officer of AT&T, observed two weeks ago. Amid the growing bellicosity, Eastman Kodak last week filed a complaint with Kantor's office that accused Japan and Fuji Photo Film of blocking Kodak's access to the Japanese market.