Which industries in the U.S. would lose in the LONG RUN if the U.S. put a tariff on all Japanese autos, and why?

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kipling2448's profile pic

kipling2448 | (Level 3) Educator Emeritus

Posted on

A useful answer would also include mention of the thousands of individuals employed in the United States by Japanese automobile manufacturers and the tens of thousands more who support those individuals through manufacture of spare parts, operation of restaurants and bars where those employees eat and spend time when not at work, and many other businesses that profit from the fact that Toyota, Honda and other foreign manufacturers maintain automobile assembly plants in the United States that build many of the "Japanese" cars sold in this country.  Aware of the political, cultural and economic sensitivities in the United States regarding foreign imports, Japanese corporations routinely open manufacturing facilities in the United States, especially in the American South where labor costs are generally cheaper than in the northern manufacturing regions.  Any actions taken by the United States to restrict the number of foreign-made cars entering the United States -- and, in addition to tariffs, such measures could include numerical restrictions on the number of imports or the passage of legislation requiring all imported cars to meet certain unattainable or expensive to attain standards -- would likely be met with the closure or threat to close foreign-owned facilities located in the United States.  That would seriously aggravate economic conditions in the U.S. and precipitate an expensive trade war that would damage relations not just with Japan but with other foreign countries, including South Korea, Germany and Sweden, that export cars to the U.S. market.

Also not mentioned in the earlier answer is the effect of efforts to restrict Japanese imports on the thousands of Americans employed at automobile dealerships that sell Toyotas, Nissans, and Hondas.  And, again, the reverberations would be felt in all the businesses that depend upon the wages of those employees.  The auto parts stores that sell to those dealerships, the nearby fast-food establishments where the mechanics, parts salesmen, and others eat their lunches, and the laundry services that clean their uniforms would all suffer.  Anytime a particular industrial sector is hit by hard times, the reverberations are felt well-beyond those directly impacted.  Tertiary industries and businesses may be less visible when considering the impact of protectionist trade measures, but they are very real and would indeed be felt in the broader economy.

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

It is not possible to know for certain what US industries would be harmed in the long run if the US were to place a tariff on all Japanese cars.  However, we can engage in informed speculation.  There are at least two types of US industries that would be harmed, with one of these types being much bigger and much more important than the other.

The smaller and less important industry would be the import industry.  If tariffs were placed on all Japanese cars, there would be fewer Japanese cars entering the country.  This would mean that there would be less need for workers who process imports, doing things like getting the cars off the ships and off the docks.  There would be less need for railroad services to carry the cars from the ports to the places where they would be sold.  There would be less need for mechanics who specialize in imported cars.  However, none of these impacts would be very significant in the larger scheme of things.

The much more important impact would be on American industries that rely on exports.  This would be particularly true of American companies that rely on exports to Japan.  The reason for this is that Japan would surely retaliate against the US and put tariffs on many things that we produce and sell to them.  Other countries in the world might.  If this were to happen, American exports would suffer.  For example, American farmers sell a great deal of wheat to Japan.  They would be harmed as Japan placed tariffs on their wheat.  Any American industry that relies on exports, particularly to Japan, would be harmed in the long term.

Tariffs may seem good in the short term because they help some American companies.  However, economists say, they are bad in the long term, in part because they hurt firms that rely on exports. 

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