Commentary: Blockade would pain Tacoma

TACOMA, Wash. -- There's a port outside my office. For months now, Japanese ships owned by three companies that docked here were fined $100,000 as part of a minor trade war between Japan and the U.S. The owners of the ships have met the piper and will have to pay if they want unload any more cargo. Presto, it's a Big Trade War, and the Port of Tacoma is a microcosm of the looming battle.

What's the war about? Mostly the trade imbalance in automotive parts and finished vehicles, but the complete ban on Japanese ships at American ports would have profound impact on electronics imports. Since April, the U.S. has imposed a $100,000 fine on each ship owned by Kawasaki Kisen Kaisha Ltd., Nippon Yusen KK, and Mitsui Osk Lines Ltd. that entered our ports. The companies have refused to pay, and for the past few weeks the ports along the West Coast have been poised, waiting for this new chapter in the conflict to erupt.

In Tacoma, the pain will be deeply felt. Japan is our largest trading partner in total value of goods. We trade five times more with Japan than any other country, the value of that trade adding up to more than $12 billion a year. Electronics are the fourth most-imported products, accounting for $3.1 billion each year. By contrast, the Port of Tacoma exports only $86 million worth of electronics.

In short, we get our butt kicked up here in the Northwest - of course, we mostly make software. Hardware manufacturing in the U.S. is concentrated more in California and Texas. Nevertheless, you can see that the trade balance in this category is pretty lopsided.

What will a blockade of Japanese ships do to electronics component costs? Likely very little, since the blockade will be short and has been long in coming. Buyers for American electronics manufacturers have had plenty of warning about this crisis, and have either stocked up on material in anticipation of the blockade or are preparing a new resume.

Core question: Is the trade imbalance important? Not really. American exports intellectual property to Japan worth far more than the value of the products we import. Few American jobs are being lost as a result of this dispute; no new chip fabs will be created in the U.S. instead of Japan or Malaysia in its wake. In all likelihood, the impact on overall Japanese export revenues will be so severe that the $4 million in fines will be quickly paid. Then the war can go back to the negotiating table and we can all forget about it and go back to our blissfully ignorance of foreign trade issues, never to see the impact of the blockade on our computers and peripherals.

Mitch Ratcliffe is president of Internet/Media Strategies Inc. (www.ratcliffe.com), a Tacoma, Wash.-based consultancy. He can be emailed at godsdog@ratcliffe.com.