The dollar declined abruptly in value against the yen in the second quarter of 1994, spurring the central banks of seventeen nations to coordinate a series of intervention efforts in the world's currency trading markets. In addition, the dollar's decline sparked discussions of the possible policy moves the United States and other nations might take to stem the fluctuations in the value of the dollar. Economic theory and empirical evidence indicate that the underlying movement of the exchange rate is tied to the long-term, macroeconomic movements of the economy, or to the combined movements of the economies of different countries, such as the United States and Japan. These macroeconomic factors account for at least half of the overall movement of exchange rates.

On May 9, 1995, the United States initiated action designed to resolve a dispute with Japan dealing with automobiles and auto parts. In an effort to move negotiations along and resolve a U.S. unfair trade practices case (Section 301) dealing with barriers in the aftermarket for auto parts in Japan, the United States has threatened to impose 100 percent tariffs on imports of thirteen Japanese luxury passenger cars (Honda Acura, Nissan Infiniti, Toyota Lexus, Mazda 929 and Millenia, and Mitsubishi Diamante). The decision will be made by June 28, 1995. The United States also is pursuing a broad unfair trading case dealing with access to Japan's automotive market at the World Trade Organization. Japan, meanwhile, has also initiated a case at the WTO challenging the legality of the threatened increase in U.S. tariffs. Consultations under the WTO on these issues began in Geneva on June 12, 1995.