ECONOMIC SUPERPOWERS AT ODDS : Japan Sanctions Could Hurt U.S. Car Buyers : Trade: Tariffs that Clinton is expected to impose will hit American consumers and workers, Japanese auto industry representatives warn.
The trade sanctions that President Clinton is expected to impose on Japan this week in an attempt to pry open its markets for U.S. cars and parts will hit American consumers and workers too, representatives of the Japanese auto industry warned Sunday.
Clinton made no announcement after meeting with his trade advisers Sunday, but he was thought to be leaning toward stiff sanctions that could include tariffs, or import taxes, of up to 100% on Japanese luxury cars and on some auto parts.
“In California we’ve faced fires, floods and earthquakes, and now we have another disaster--a man-made one,” said Bob Wade, a spokesman for Toyota Motor Sales U.S.A. in Torrance. “The consequences are going to be much more severe than the politicians inside the Beltway believe,” he said.
Clinton met Sunday afternoon with U.S. Trade Representative Mickey Kantor and Treasury Secretary Robert E. Rubin to review the recommendations that his senior economic advisers prepared Saturday. The goal is to reduce America’s $36.7-billion automobile trade deficit with Japan.
Besides tariffs, the President’s options include retaliatory steps intended to make it as difficult for Japan to enter the U.S. market as U.S. auto makers assert it is for them to begin to do business in Japan. Such steps could include strict inspections of every vehicle entering the United States from Japan, and limits on the opening of dealerships for Japanese vehicles.
Retaliatory measures would send harmful ripples through the U.S. economy, where Japanese-owned auto plants employ 36,000 directly and more than twice that number work for suppliers or dealerships, said a spokesman for the Japanese Auto Manufacturers Assn. With tariffs expected to be aimed at vehicles priced above $30,000, Japanese luxury cars such as Lexus, owned by Toyota, and Infiniti, a Nissan brand, would be prime targets.
A 100% tariff--basically doubling the price--would “bring sales to a screeching halt,” Mike Spano, manager of Infiniti of Beverly Hills, said Sunday. “We’re in bad enough shape just getting out of recession without this,” he said.
With the weak dollar driving the costs of such imports upward, Japanese manufacturers have been forced to slash overhead and profit margins in order to keep the cars at prices that Americans will pay.
“Just about everybody’s leasing now” instead of buying, Spano said, “and when you start reaching into the $700- and $800-a-month levels, people start saying, ‘Wait a minute--I don’t expect a Japanese car to be that expensive.’ ”
It was unclear Sunday whether Japanese cars that are already in U.S. ports might be subject to any tariffs. If not, Spano said, his dealership would not feel the impact for 90 days or more.
Clinton’s time is limited by his scheduled departure at midday today for Russia, for ceremonies marking the 50th anniversary of the end of World War II in Europe. Administration aides predicted that a formal announcement of the sanctions would be made by midweek, after aides finish working through the legal aspects of the sanctions list.
Meanwhile, White House Chief of Staff Leon E. Panetta said that although the negotiations had broken down--Kantor and Ryutaro Hashimoto, the Japanese minister of international trade and industry last met on Friday in British Columbia--the United States still hopes the talks can resume.
Clinton’s apparent approach was applauded by Rep. Richard A. Gephardt (D.-Mo.), the House minority leader, who has often been at odds with the President on trade matters and has pressed Clinton to follow a less-yielding course.
“I’m encouraged, and I assume the President’s going to take a strong and tough action in the next couple of days,” Gephardt said in a telephone interview. “The Japanese will complain that it will start a trade war. But when we do stand up, they open up. It’s what the President needs to do now. . . . It’s long overdue.”
Japanese trade officials have said that U.S. sanctions would prompt them to file a complaint with the World Trade Organization, but they appeared eager Sunday to separate the trade confrontation from the overall United States-Japan relationship.
“What we are seeking is to resolve this particular issue within the WTO international rules,” Hashimoto said at a Tokyo news conference on Sunday. “We did not come to an agreement, but we surely do not want to jeopardize the overall bilateral relationship. Basically that was ambassador Kantor’s line, and I too think the same way.”
Mulligan reported from Los Angeles, Gerstenzang from Washington and Holley from Tokyo.
