Sanctions Meant Mainly to Convey Warning to Japan
Most American consumers will hardly notice the tariffs on Japanese imports imposed Friday.
Although the tariffs could double the prices of the goods, which include color television sets, power hand tools and small computers, it is likely that the Japanese manufacturers will simply stop shipments here while the sanctions are in effect.
Americans also will find plenty of comparable products on the shelves, and even if a few Japanese companies drop out of the market for a short time, enough competitors should be left to keep prices down.
The list announced Friday is narrow; the $300-million worth of goods it covers represents a drop in the $80-billion bucket of Japanese imports to the United States.
For example, the lap-and desk-top Japanese computers covered in the sanctions account for between 5% and 10% of the U.S. market; the 18-inch to 20-inch color TVs have less than a 10% market share; the Japanese supply only about 30% of the three kinds of power tools listed, according to Commerce Department estimates.
Thus, for the most part, U.S. consumers and businesses are unlikely to feel more than a pinch from the tariffs. At the same time, the sanctions will not cause much pain to the products’ Japanese manufacturers.
But the Japanese, trade officials say, now know that the United States has the resolve to get tough on trade. Moreover, Friday’s action gives Tokyo only a hint of the pressure that could be brought to bear, should the trading situation worsen.
Symbol of Discontent
All along, the Administration and trade analysts have been saying that the tariffs are mainly a symbol of the United States’ discontent with what it sees as repeated and flagrant assaults on international trading laws.
A senior trade official said on Friday he believes that the Japanese have not taken the semiconductor agreement “serious enough or put enough resources into it” since it was reached last Sept. 2. He believes now they will.
“This is a very measured step,” said James I. Magid, an electronics industry analyst in New York. “It is not a body blow, it is a gentle tap with the ruler on the hand. But they’ll get the message.”
The message, trade officials said, is that when the United States retaliates, it can pinpoint the few companies that it believes are most flagrant violators of trade laws.
Other observers, however, see a different message. They believe the limited list of targeted products shows a significant U.S. dependence on Japan and that American businesses and consumers are unwilling to sustain the pain of withdrawal, whatever the long-term benefits.
‘Hard to Argue With’
“It’s hard to argue with most things on the list,” said Michael Borrus, an economist with the Berkeley Roundtable on the International Economy. “But I can think of a half-dozen things that would have been perfectly appropriate and have had more impact. . . . The extent to which we had to sculpt the list so carefully shows we’re unwilling to provide pain to American consumers or industry to achieve results that are ultimately of benefit to both.”
The committee of Administration officials who put together the list of products weeded through a 3-foot-high stack of documents concerning the effect of the proposed sanctions and listened to more than 12 hours of testimony from more than 80 company officials, lawyers and an ordinary citizen or two.
“We can fine-tune this to a degree, but not to too fine a degree. Somebody inevitably gets caught,” one U.S. trade official said.
The tariffs on lap-top computers will affect primarily NEC and Toshiba, two of the companies seen as primary offenders in the semiconductor trade dispute. A broader range of desk-top computer manufacturers will be affected, including some companies that are not parties to the dispute, most especially Epson.
The tariffs on televisions primarily harm NEC, Matsushita, Toshiba, Hitachi and Mitsubishi. Because Sony assembles most of its televisions of that size at its plant in San Diego, it will not be affected.
Shortages Possible
However, Sony officials said there could be some temporary shortages of its popular 13-inch color televisions. That’s because when the first list of products being considered was released on March 27, Sony halted all shipments of those TVs to the United States.
The tariffs on power hand tools will affect primarily Hitachi. The list was honed down from more than eight kinds of tools to just the three to avoid hurting Makita and Ryobi, two other Japanese tool makers who are not involved in making or buying chips.
Patrick Griffin, assistant vice president of Makita USA Inc., the Cerritos, Calif.-based subsidiary of Makita, said the company was “ecstatic” over the exclusion of its best-selling products from the tariff list.
Makita, which had U.S. sales of $255 million last year in the power tool market, estimated the sanctions would affect “less than 10%” of its sales.
“The items are not ones we are particularly strong in. No parts are on the list,” Griffin said. “We were very concerned for our employees. We’re moving (manufacturing) to the U.S. as fast as it makes sense. If (the sanctions) had hit us across the board, we’d have been almost dead in the water. It would have hurt 80% of our sales if it had affected parts.”
