The postwar transformation of the international environment has caused economic issues to become a main source of contention among industrial states. The trade imbalance between Japan and its trading partners became a major source of conflict. Reciprocity of access and opening the market of Japan became the main point of debate and the major issue affecting relations between Japan and the United States. While the distinction between the domain of domestic and international politics increasingly is blurred, different domestic political economies create bilateral political and economic conflict. The structure and politics of intercorporate groups or vertical keiretsu are a major feature of Japan's industrial structure and political economy. This case study examines how vertical keiretsu in the automobile and home electric appliance industries affect the Japanese political economy and international trade. A political economy approach focuses on the political context of economic phenomena by analyzing both political and economic variables. Case studies of keiretsu were used in order to gain an understanding of Japan's political economy. A number of propositions or assumptions about the political economy and the dynamics of keiretsu were examined in these studies. It was found that vertical keiretsu influences the industrial sector, trade, and foreign policies …