Trade Between the United States and Japan

¶ … Trade between the United States and Japan [...] trade between the United States and Japan, such as exports and imports of goods, exports and imports of services, tourism, and investments. Japan and the United States are two of the premier forces in trade around the world. The two countries depend heavily on each other in a variety of trade areas, from electronics to tourism and banking. Together, they form a formidable bond of trade that dominates the world market and the world economy.

In 2002, Japan's total foreign trade was 52,109 billion yen. The portion they traded with the United States was 14,873 billion yen, or 28% of the country's total foreign trade ("Yearbook," 2003). Conversely, the United States only trades about 9% of their foreign trade with Japan, so there has been a deficit between the two countries for many years. This seems odd since Japan is a smaller country with less population and square area than the United States. However, many of Japan's trade items are extremely popular in America, and so the deficit continues to grow.

JAPANESE EXPORTS

The Japanese export a wide variety of items from motor vehicles to electronics. Their major market is Southeast Asia, where they trade 37% of their exports, and then the United States with 28%. Japanese automobiles are popular around the world, and they are extremely common in the United States. From Subaru to Honda, Japanese automakers exported 4,468,092 billion yen worth of automobiles to the United States in 2002, which averages out to about 493,000 vehicles (not including trucks and motorcycles). They also exported about 889,898 billion yen worth of automobile parts to the U.S. ("Yearbook, 2003). The country also exports a large amount of electronic goods, including cameras, computers, televisions, and music players, along with some agricultural goods and silk fabric. Japan's exports keep the country in good economic shape most of the time, although they did face a recession in the late 1990s. The Japanese economy has seen a series of peaks and valleys throughout its' history, and Japanese leaders are hoping to create a stronger, longer lasting economy by creating more trade relationships with foreign trade partners.

JAPANESE IMPORTS

Japan imports nearly 100 billion yen less in materials and services than they export. About 22% of their imports come from the United States. The country imports mainly fossil fuels, which are have been decreasing in availability in Japan for decades, and raw materials, especially food, because they cannot grow enough food to feed their hungry, populous nation. Some of the major roadblocks to Japanese importing are the sanctions the Japanese place on many incoming goods. For example, they severely limit the number of American cars that can be imported to their country each year. In fact, the only totally free trade agreement with another nation is Singapore, a tiny country that has little affect on the long-term trade in Japan. Clearly, both Japan and the U.S. have trade issues they must address. One of the main issues are sanctions on each side that hinder free trade and hinder both nations from reaching their true trade potential with each other.

SERVICES

While most people tend to think of only tangible items as trade items, other areas also fall into the category. Many of the service industries are also traded throughout the world. For example, tourism is a service industry that reaches a global market. Millions of visitors flock to Japan each year, and many of them are from the United States. These tourists add cash to the economy while they learn more about the Japanese people and their unique and vibrant country. Japanese tourists also flock to the United States, adding to our service economy and to the economy of many of their favorite tourist destinations, including Disneyland and Disneyworld, the Grand Canyon, and Las Vegas.

Financial services are also a burgeoning part of the Japanese economy. Japan boasts some of the world's largest banks, and they fund a variety of projects and services around the globe. They are also branching out into other areas, such as investment in film and television (i.e. Sony Pictures in the U.S.), and in outsourcing, especially in the financial and information technology service sectors.

TRADE SANCTIONS

Because of the long trade deficit between the two countries, the United States has enacted trade sanctions against many Japanese imports. This is one reason so many Japanese manufacturers have moved some of their operations to the U.S. For example, Subaru manufactures cars in Indiana, and Honda manufactures many their cars and other products in eight plants across the United States. However, trade relationships have been strained between the two countries for many years because of sanctions and tariffs levied by both sides. The Japanese tax or tariff many items imported into their country, which does not promote good trade relations with the world. In 2001, the United States and Japan entered a joint agreement to mend their trade issues. This "U.S.-Japan Regulatory Reform and Competition Policy Initiative" continues to promote trade and growth between the two countries, and it urges both countries to create new ways of trading with each other with fewer sanctions and the possibility for a much higher volume of trade in the future.