US-Japan Trade Imbalance

The imbalance in US-Japan trade has been speculated upon by various economists throughout the last several decades to ascertain the reasons and the influence of such on the economies of both countries. Depending upon the perspective of the imbalance, whether viewed from the Japanese side or the American side, there are questions that are raised and answers which must be sought.

There are doubtless many reasons for this imbalance, but some of the more easily explained of these can be highlighted here.

Labor Cost

One of the biggest differences in the two countries in terms of the production of merchandise, products and services is the level of labor cost. In japan this cost is significantly lower and that creates a situation where the end product can be created at a lower net cost than a comparable products produced in the US. Further exacerbations to this imbalance are created by the close proximity of Japanese based businesses with even cheaper labor from mainland China and Taiwan, making it very cheap to import parts for assembly in Japanese factories.

While US businesses also have the same access to the cheap labor force in Eastern countries, the shipping costs of parts is greater. Add to this the fact that the business relationships with certain Chinese and Taiwanese manufacturers may be sealed by Japanese companies and not accessible by their US counterparts.

Work Ethic

Another possible cause of the inequality of in trade between Japan and the US could be located in the work ethic of the workforce in the two countries. Studying the Japanese work ethic will reveal a highly motivated and dedicated workforce that are proud of the company they work for and work harder and more diligently than their American counterparts. This issue may be argued by some, but even though some US companies are adopting similar motivational strategies as those employed in Japanese companies, the effect on the workforce is not as potent.

There may be no ready solution to this difference as it goes down to cultural and traditional levels that are difficult to break down. The facts cannot be argued so easily, but attempts can certainly be made to try and close the gap between the differences in work ethic between the two countries. How successful these attempts will be depends on good management skills and education of the workforce to the advantages of higher output and quality control in order to compete on a level playing field.

Further Reading:

Below are links to helpful websites that can provide more information on the trade differences between the US and Japan as well as related topics on internations trade and commerce.