Ripple Effect of Trade Rift Feared

Mounting trade friction between the United States and Japan has raised fears among many of Asia’s chief exporting nations that it could inflict far-reaching economic damage.

Businessmen and trade officials in major capitals around the region said that a U.S. move against Japan might boost protectionist sentiment and lead to further curbs on other Asian exporters.

But some exporters said that while the conflict would hurt them in the long run, in the short term at least, Tokyo’s loss might be their gain.

The United States is threatening to impose $300 million in punitive tariffs on imports of Japanese electronics goods on April 17. It has already begun collecting bonds on products such as personal computers and television and recording equipment.

The move was prompted by what President Reagan said was Japan’s failure to uphold a pact in which it pledged not to sell semiconductors, tiny silicon memory chips used in high-technology goods, below production cost.

Makoto Kuroda, Japan’s vice minister of international trade and industry, is in Washington for talks with U.S. Deputy Trade Representative Michael Smith on ways to settle the dispute.

On the eve of his departure, Japan’s ruling Liberal Democratic Party outlined a package of economic measures to deflect U.S. protectionist pressure.

The measures include a large-scale supplementary budget and a record amount of public works spending in the first half of the financial year.

Unofficial Japanese estimates put the effect of the threatened tariffs substantially higher than the U.S. figure of $10 billion, and spokesmen of major electronics companies in Japan said they would virtually halt exports of the disputed products.

“We wouldn’t be able to do business,” said an official at the large Japanese firm Matsushita Electric.

Serves as a Warning

In Taiwan, businessmen and officials are also worried.

“We are aware of the seriousness of the U.S. threat against Japan because it serves as a warning to us,” said a senior trade official who requested anonymity.

Taiwan is particularly vulnerable because of its trade surplus of $15.6 billion last year--95% of which was with the United States.

The surplus also helped swell the island’s foreign currency reserves to $53 billion--the third highest in the world.

“We must quickly open our markets, remove trade barriers and cut import tariffs to allow imports of U.S. products if we want to defuse problems from possible U.S. retaliation,” said Paul Sheen, chairman of the Taiwan Safe Group, a major textile exporter.

A senior official of the Korea Trade Promotion Assn. said the U.S.-Japan dispute might also lead to pressure on South Korea, whose chief exports, such as cars and electronics, are similar to those of Japan.

Last year, South Korea had a trade surplus of $7.1 billion with the United States, up from $4.9 billion in 1985.

In Malaysia, however, trade officials and businessmen said tough curbs against Japan might allow hard-hit producers of semiconductors in other countries to expand their sales to the United States.

In Hong Kong, where Japan has allegedly been dumping much of its below-cost semiconductors for re-export to the United States, some electronics manufacturers share that view.

Australians Also Concerned

The United States last year was Hong Kong’s biggest export market, accounting for more than 30% of all domestically produced exports.

Australian officials have also expressed concern at the threatened U.S.-Japan rift.

“This kind of deterioration in trade relations between two countries, which are major trading partners of ours, is a very serious matter,” Industry Minister John Button said in Canberra.

The Australian government was awaiting the outcome of the U.S.-Japan talks with interest and concern, he said.