100% Tariff Put on Some Japan Goods : Reagan Move to Halt Chip Dumping Could Double TV, Computer Prices
President Reagan on Friday imposed tariffs of 100% on medium-sized Japanese color televisions, powerful lap-top and desk computers and certain hand power tools, to retaliate for Japan’s failure to allow more American products into its markets and to halt the underpriced “dumping” of Japanese semiconductor computer chips in other nations.
The measure, which takes effect immediately, covers goods currently in customs warehouses, but not those on retailers’ shelves. It may double the price of television sets and other products finished in Japan, though those assembled in the United States by Japanese companies or their subsidiaries would not be affected.
“The health and vitality of the U.S. semiconductor industry are essential to America’s future competitiveness. We cannot allow it to be jeopardized by unfair trading practices,” Reagan said in a written statement.
Semiconductors are electronic circuits that store and manipulate information and are used in a variety of products from computers to consumer electronics.
The President’s action, although expected, heightens the trading tension between the United States and its second largest trading partner, and it raises the risk that Japan will take steps to reduce its imports from the United States.
However, in Tokyo, Hajime Tamura, minister of international trade and industry, while condemning Reagan’s decision, declared today that Japan will refrain from taking retaliatory action of its own.
“Hoping to prevent this issue from causing severe damage to the world’s free-trading system, the Japanese government has decided, from this broader perspective, not to take any retaliatory measures immediately,” Tamura said.
According to the White House, Japan has failed to live up to an agreement, signed Sept. 2, 1986, in which the Japanese government promised to prevent below-cost sales of Japanese produced semiconductors in third countries, and to enhance access to the lucrative Japanese market for foreign-made products.
The sanctions are being applied to:
--The more powerful computers available for the home market, including both desk-top and portable units with a capacity of 16 bits.
--Power hand tools, including certain construction-grade rotary drills, electropneumatic rotary and percussion hammers, grinders, sanders and polishers used by industry for residential and non-residential construction.
--Eighteen- to 20-inch color televisions.
“The products upon which the tariffs are being raised were chosen to minimize the impact on American consumers and businesses,” Reagan said. “All these products are available from domestic or other foreign producers.”
White House spokesman Marlin Fitzwater said that because most of the products are available from other producers, price increases felt by American consumers “should be minimal.”
On March 27, Reagan announced that sanctions would be imposed. He made public a list of 17 broad product categories representing $1.9-billion worth of Japanese imports a year as potential targets.
The list was trimmed to imports worth $300 million annually--the amount the government says equals the injury sustained by the U.S. semiconductor industry in the eight months since the two countries signed the trade agreement on microchips.
Computer Share $180 Million
According to Fitzwater, the computers account for $180 million in U.S. sales, the televisions $90 million and the tools $30 million.
He said there would be no impact on televisions assembled in the United States from Japanese parts.
Tamura, the Japanese trade minister, reaffirmed today that Japan will, however, file an appeal under the General Agreement on Tariffs and Trade, seeking bilateral consultations with the United States initially.
GATT is a system of free-trade rules set up in 1948 to reduce trade barriers through international negotiations. GATT has 92 member nations, and the rules cover more than 80% of world trade.
Although a ruling supporting Japan’s claim that the American punitive tariffs violate GATT rules would give international sanction to retaliatory tariffs by Japan, Reagan is widely expected to lift the sanctions before any decision could be reached in GATT.
Echoing remarks by White House Chief of State Howard H. Baker Jr., Tamura declared that “a trade war will not occur.”
‘Will Not Have Trade War’
“Japan and the United States are nations with the highest level of friendly relations. Although we may exchange words which sound like a trade war, we will not have a trade war,” he said.
Tamura said he would present new, current data to U.S. Trade Representative Clayton K. Yeutter next week and renew an appeal for immediate withdrawal of the sanctions. The two officials are scheduled to meet both Tuesday and Wednesday to discuss the semiconductor dispute and overall U.S.-Japan trade issues.
He said he thought Japan would be able to provide convincing new data on gains of sales of American semiconductors in Japan and proof that Japanese chip makers were not dumping in third-country markets “by the time Prime Minister (Yasuhiro) Nakasone visits Washington” April 29 to May 2.
“The problem is whether the United States will evaluate that data as convincing,” he added.
The measures taken Friday are considered the most stringent economic steps taken against Japan since World War II, and they reflect the increasingly volatile U.S.-Japanese trading relationship.
Seek to End Other Quotas
Even as the Administration was clamping down the sanctions, Agriculture Secretary Richard E. Lyng and Yeutter were preparing to seek total elimination of Japanese quotas on the import of American beef and oranges during next week’s visit.
U.S. officials have credited Nakasone with trying to improve ties with the United States in a broad range of categories, and particularly in the area of defense, where Japanese spending is increasing, after years of U.S. pressure for a greater contribution to the allied effort in the Pacific.
The timing of Nakasone’s visit to the United States, made even more crucial as a result of Friday’s announcement, could serve as a political embarrassment to him.
Reagan said the U.S. tariffs would be abandoned “as soon as we have firm and continuing evidence that the dumping in third-country markets has stopped and that access to the Japanese market has improved.”
Fitzwater said it was uncertain how long this would take, but he said that the tariffs would be applied for several weeks at “a minimum.”
When asked whether Nakasone, in his visit, would be able to win a modification or lifting of the sanctions, Fitzwater replied: “No, we’re looking for a change in market conditions.”
He said that Nakasone had recently written to Reagan about the dispute, and that the President responded Thursday evening, informing the Japanese prime minister “in a personal way” of the decision to proceed.
Expressing sensitivity to the possible repercussions of the sanctions, Fitzwater said: “We do not want a trade war or to precipitate anything that would come close to that.”
Tamura expressed sympathy both for the Reagan Administration and the United States.
He said he realized that Yeutter “had to look both in front and back” in dealing with Japan, on one hand, and the U.S. Congress, on the other. He attributed Reagan’s decision to carry out the sanctions to “American frustrations” with a lack of improvement in its trade imbalance with Japan, which last year reached $58.6 billion.
In the first two months this year, the bilateral deficit was running at an annual rate of $56.6 billion.
U.S. “frustrations” also have been fueled, Tamura said, by its own inability to reduce the federal government’s budget and to what he called “exhaustion” of the American economy itself. He admitted, however, that Japan’s failure to come up with a convincing program to expand domestic demand and pull in more imports was playing a role in American “frustrations.”
Rejects Amending Pact
Makoto Kuroda, MITI’s vice minister in charge of international affairs, ruled out renegotiation of the U.S.-Japan Semiconductor Agreement, but said talks he conducted in Washington in the last two weeks showed that a “discrepancy” existed in the interpretations of the two nations of what Japan committed itself to carry out under the agreement.
“We should exchange opinions in order to reach a better agreement on what is written in the agreement,” Kuroda said.
While the trade action, given final approval Friday morning by the President while he was on vacation at his ranch 30 miles northwest of Santa Barbara, is a sour note in the U.S.-Japanese relationship, its political impact in this country could be just the opposite.
The Administration has been under pressure to protect U.S. jobs from competition overseas, and it is fighting a proposal advanced by Rep. Richard A. Gephardt (D-Mo.) that would limit its flexibility in responding to what it sees as unfair trading practices by imposing specific sanctions.
Gephardt, a presidential candidate and one of the strongest congressional advocates of protectionist trade measures, approved Friday’s action. “Our trading partners need to know that we’ll hold them to their word in trade agreements with us,” he said. “The semiconductor case reaffirms the need to enact trade legislation which insists on results backed by sanctions.”
Staff writer Sam Jameson in Tokyo contributed to this story.
Products Affected by U.S. Sanctions
Here are some questions and answers about the tariffs imposed by President Reagan:
Q. Exactly which computer products are affected?
A. Two kinds of computers are affected, portable microcomputers and desk-top computers, both with a power of 16 bits or more. Companies whose products are subject to the tariffs include Toshiba, NEC, Mitsubishi, Fujitsu, Matsushita, Sanyo, Canon, Sony, Sharp and Epson. Mainframe and supercomputers are not affected by the order.
Q. Which color televisions are involved?
A. Finished color television sets having 18- through 20-inch diagonally measured screens. Affected companies include Panasonic, NEC, Toshiba, Hitachi and Mitsubishi.
Q. Which power hand tools are covered?
A. Rotary drills that are not battery powered and that have a chuck of one-half inch or greater capacity; electropneumatic rotary and percussion hammers; certain grinders, polishers and sanders. Affected companies include Hitachi, Makita and Ryobi.