ECONOMISTS: CONSUMERS WOULD SUFFER IN TRADE WAR

A trade war between the United States and Japan would hurt consumers, two Southeast Missouri State University economists say.

President Clinton may be gunning for Japan with talk of imposing punitive tariffs on the Asian nation if it doesn't open up its markets to American goods. While that may win him some points politically, it's a bad move economically, the university professors said.

"The last time it was tried on a worldwide basis was in the early 1930s. And it passed the Great Depression around the world," said economics professor Terry Sutton.

Fellow economist Bill Weber said that Clinton's threat to impose punitive tariffs could lead to retaliation by Japan. "It could lead to a big trade war in which world trade could just kind of grind to a halt."

It's bad medicine for the U.S. to impose higher tariffs on Japan, said Sutton.

"It's sort of like shooting yourself in the nose," he said.

American businessmen are naturally upset that Japan imposes barriers restricting the import of American goods.

But if the U.S. imposes higher tariffs on Japanese goods, "it may be costly to this country," said Sutton.

"The ones that suffer will be the American consumers," he noted. "If you have to pay more to get a Honda car or a Panasonic stereo, then that hurts you as a consumer."

"I think a lot of times they (higher tariffs) cost the consumer in terms of higher prices, and in a sense take away jobs from U.S. workers," said Weber.

Said Sutton, "Free trade is one of the few things that most economists agree about."

Sutton said the problem with high tariffs was clearly demonstrated in the early 1930s.

The U.S. imposed the "highest tariff wall ever. It made our economy go into a deeper depression.

"Congress assumed that we would continue to export as much if we kept imports out, but other countries retaliated and raised their tariffs," said Sutton.

Both Sutton and Weber said Japan currently is suffering through a serious economic slump.

As a result, Japan may decide to open up its markets to American goods in an effort to improve its economy, Sutton said.

Then again, it could decide to "retaliate and retrench even more," said Weber.

"It is easier to knock down trade barriers when your economy is growing rather than in a recession, I think," Weber pointed out.

Weber said a trade war could "hurt us for a while."

But he said that if Japan and the U.S. reduce trade barriers, "then everyone should benefit."

Both Sutton and Weber said trade barriers hurt the citizens of the nations imposing the tariffs.

For example, it costs $20 to $30 for a steak in Japan because of that nation's beef import restrictions, said Sutton.

Weber said Japan has opened up its markets some over the last few years. "It has just been slow," he said.

Trade barriers serve to distort a nation's economy. Japan, for example, subsidizes rice production and puts such a high tariff on imports that Japanese farmers continue to grow rice rather than turn the farm land into golf courses.

As a result, said Weber, "it is cheaper (for Japanese) to fly to Hawaii to play golf than it is to play golf in Japan."

Sutton said free trade helps everyone concerned. "I personally think free trade benefits consumers and improves products on both sides of the market."

Competition from Japanese car companies, for example, forced America's automobile companies to make better cars, said Sutton.

"Cars were lousy back in the 1970s. The Japanese came in with a better product and a lower price, and the Big Three automakers were caught by surprise," he said.

Weber said that if America's auto industry had been protected from foreign competition, "we would still all be driving big gas guzzlers."

Imagine, Sutton said, what it would be like to live in Missouri if there was no free trade with other states.

"The reason we live so well in the United States is that it is one of the biggest markets in the world where there is free trade between the regions," Sutton said.