Top 10 Series: Japan, Still 4th-Ranked Trade Partner, Sees Car-Import Dominance Slip

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For only the fourth month in the last two decades, Japan’s share of passenger vehicle imports into the United States dipped below 17% in October, less than half the 44.66% total from 1992.

With that, for the second month in a row and the third in the last six, the value of U.S. imported passenger vehicles was greater from Mexico than from Japan.

Japan, until 1999 the United States’ second-ranked trade partner behind Canada and the original powerhouse manufacturing importer into the United States prior to China’s ascent, today trades in the shadow of Mexico, Canada and China — the current order — which regularly account for better than 40% of all U.S. trade.

This is the fourth in a series of columns focused on each of the United States’ top 10 trade partners. I previously wrote a column about Mexico, currently the nation’s top-ranked trade partner, Canada and China.

After this analysis of No. 4-ranked Japan, are posts on No. 5 Germany, No. 6 South Korea, No. 7 United Kingdom, No. 8 Taiwan, No. 9 India and No. 10 Vietnam. These 10 account for two-thirds of all U.S. trade, with just the top three at better than 43% this year.

I wrote a similar series of columns about the nation’s top 10 ports — the top-ranked Port of Los AngelesChicago’s O’Hare International AirportPort Laredo in Texas, New York’s JFK International, the Port of Newarkthe Port of HoustonDetroit’s Ambassador BridgeLos Angeles International Airport and the Port of Savannah.

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All are based on my analysis of U.S. Census Bureau data, which I have been slicing and dicing for two decades.

Japan will end the year as the leading U.S. importer of passenger vehicles, as it has done the last three years. That’s when it ended eight straight years with Canada on top. Its market share will be in the range of 23%, but that’s down from 2008, when it ended the year at just under 33%.

But, the October statistic, while possibly at least affected by the ships stranded off the coast of Los Angeles, waiting for a berth at either the Port of Los Angeles or the Port of Long Beach, is at least a metaphor for another transition in the U.S. trading relationship with Japan.

Japan, like many of the Asian and European automotive manufacturing countries, also builds cars in the United States’ southern states as well as in Mexico and Canada, in what is the world’s largest if not its most intricate cross-border supply chain. (China is the world’s largest market by vehicle sales.)

But the country that brought us the Sony Walkman, brought us Hondas, Toyotas and Datsuns (now Nissans), brought us Canon and Fuji, brought us Yamaha, is the victim of globalization’s march toward price efficiency, a victim of the consequent success of globalization in uplifting previously undeveloped countries like South Korea and Vietnam, and the inability of governments to adequately credit suppliers of parts that go into finished goods before crossing borders for the last time.

It’s been more than three decades, but among those old enough, who can forget the panic, a short-lived one it turns out, that the Japanese were going to buy up all of America after a Japanese conglomerate bought iconic Rockefeller Center in New York City?

For a little perspective, it’s worth noting that not only was it the United States’ second-largest trade partner at the time, it carried the United States’ largest trade deficit. That, in fact, didn’t change until years later, in 2000, when China first topped its Asian nation and one year before it was admitted to the World Trade Organization.

Today, the United States has a larger trade deficit with China, Mexico, Vietnam and Germany, with a deficit similar to that of the U.S. deficit with Ireland.

Don’t feel too sorry for Japan. Its economy is the world’s third largest, trailing only the United States and China.

And still, Japan is the United States’ perennial fourth-ranked trade partner. That certainly underrepresents its importance, given that components from there and manufactured elsewhere by Japanese companies are common in our computers, cell phones, non-Japanese cars, household appliances and other electronics.

In part because of this, over the years the United States’ trade with Japan has become slightly more balanced.

Today, for every dollar of trade between the two nations, 35 cents is a U.S. export. In a measure that changes little over time, this one has risen from just under 30 cents little more than a decade ago. The U.S. average with the world is 38 percent exports and 62 percent imports.

So far this year, through October, U.S. trade with Japan is up 16.55%. U.S. trade, when compared to Covid-hit 2020, is up 21.87% year-to-date. Japan trade is down 4.35% from its 2019 record year, when trade stood at $182.55 billion and eventually topped $218.29 billion by the end of the year. U.S. trade is up 8.29%.

It is the leading buyer of a wide range of U.S. exports and imports, including (on the U.S. export side) medicines in pill form, beef , optical fibers (and on the import side) semiconductor machinery and parts, self-propelled construction equipment and mounted optical elements.