U.S. Turns Up Heat In Trade Battle With Japan

Japan responded sharply Tuesday to U.S. plans to impose sanctions on two Japanese airlines - the latest escalation in the Clinton administration’s get-tough trade policy with Tokyo.

But as government officials warned they might retaliate against U.S. air sanctions, Japanese car makers were preparing to announce plans to boost production in North America to end an auto-trade stalemate.

The Japan Industrial Journal said the five largest automakers plan to announce they will boost annual production in North America by about 400,000 vehicles - to 3 million by 1998.

It said the car makers also plan to increase the portion of locally procured parts for major models assembled in North America.

The report came eight days before a U.S. deadline in the auto talks. The Clinton administration plans to levy 100 percent tariffs on Japanese luxury vehicles if the two nations don’t agree by June 28 on ways to increase sales of American cars and parts in Japan.