President Reagan slapped up to $300 million in new tariffs on Japanese imports today because Japan has been dumping cheap computer chips on the American market in violation of an 8-month-old agreement.
“Regrettably, Japan has not enforced major provisions of the agreement aimed at preventing dumping of semiconductor chips in third-country markets and improving U.S. producers’ access to the Japanese market,” Reagan said in a statement.
“I am today announcing my intent to raise tariffs on as much as $300 million in Japanese exports to the United States,” Reagan said.
But he said the United States is not breaking the Sept. 2 agreement he said Japan was violating because Tokyo “has in recent days announced a number of actions aimed at improving their compliance with the agreement.”
The action, announced at the White House by Trade Representative Clayton Yeutter and Commerce Secretary Malcolm Baldrige, threatened to damage relations between the two allies far beyond any of the irritations of the past decade over Japan’s blocking of its market to U.S. high technology products and its aggressive sales in America resulting in a $59 billion trade imbalance.
Action Called Justified
Earlier today, Baldrige said sharp retaliatory duties on Japanese electronic products were justified because Japan reneged on its pledge to halt “dumping” of computer ships on the international market.
“I think we’re just holding them to account under international trading laws,” Baldrige said.
The sanctions could sharply raise the price of a wide array of Japanese items, ranging from television sets to personal computers.
But Baldrige said in an interview that the list of targeted items was carefully selected by a Cabinet panel to minimize the impact on U.S. consumers.
Only those items which are also widely available from non-Japanese manufacturers will be subject to the sanctions, Baldrige indicated.
Chips Run Computers
Semiconductors are the tiny electrical chips that run computers and most other modern-day electronics devices.
Japan had agreed last July to stop “dumping” computer chips in the United States and other markets at prices far below their true value.
And, while Japan apparently has stopped the practice in this country, Baldrige said there is solid evidence that Japanese computer chips are being sold in other countries at artificially low prices--undercutting the U.S. semiconductor industry.
“In this latest case, we made an agreement, both sides signed it eight months ago. And it has been shown the Japanese haven’t lived up to their side of it,” Baldrige said.
The action announced today represents the most sweeping trade retaliation ever taken by the United States against Japan.
In advance of the announcement today, Baldrige said there will be a 14-day waiting period before penalty duties take effect. That would give Japan a chance to respond to the action and would give the United States the opportunity to remove certain items from the target list if it so desires.
Attempt to Recoup Sales
The final order will seek to recoup at least the $160 million to $170 million in lost sales that U.S. computer chip manufacturers have claimed due to the alleged third-market dumping, said Administration officials who spoke on the condition of anonymity.
Baldrige said that the products targeted for the sanctions would be products “where the Japanese have strong competition, so there are plenty of alternatives for the consumer.”