Japan’s 2011 Earthquake and Tsunami:
Economic Effects and Implications for the
United States

Dick K. Nanto, Coordinator
Specialist in Industry and Trade
William H. Cooper
Specialist in International Trade and Finance
J. Michael Donnelly
Information Research Specialist
March 25, 2011
Congressional Research Service
7-5700
www.crs.gov
R41702
CRS Report for Congress
P
repared for Members and Committees of Congress

Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

Overview
The March 11, 2011, earthquake and tsunami that occurred in Japan followed by a nuclear crisis
and shortage of electricity is having a large negative economic impact on the country but a lesser
effect on world markets. Japan has lost considerable physical and human capital. Physical
damage has been estimated as ranging from $250 billion1 to as much as $309 billion,2 the latter
figure being nearly four times as much as Hurricane Katrina ($81 billion) and roughly equivalent
to the GDP of Greece and twice that of New Zealand. In excess of 27,000 persons in Japan are
killed or missing, and more than 146,000 homes and other buildings have been totally or partially
damaged.3 Analysts expect that over the next quarter or so, Japan’s economy will contract, but
may expand because of rebuilding activity later in the year and into 2012. As the third-largest
economy in the world, Japan’s GDP at $5.5 trillion accounts for 8.7% of global GDP.
Congressional interest centers on humanitarian concerns, the impact on U.S. citizens and
American companies in Japan, and the effects of the disaster on the exchange of both goods and
services, and on Japanese and U.S. financial markets, interest rates, and the yen-dollar exchange
rate.
The damage from the earthquake and tsunami is being compounded by the evacuations and
uncertainty from the problems at the Fukushima nuclear reactors. Tokyo’s power supply is
experiencing a shortfall of as much as a third of peak capacity, and the electrical grid is
experiencing a current shortage of as much as a quarter of capacity. The earthquake also damaged
plants and equipment far from its epicenter. Port facilities, sensitive electronic equipment, 2,035
roads and 56 bridges also were harmed. These were located in a wide area of the country that
even reached Tokyo’s northern suburbs. The human toll also has been great with 10,102 persons
killed, 17,053 missing, and another 2,777 injured (as of March 25, 2011). Higher radiation levels
are being detected in Tokyo’s water supply and in leafy vegetables and milk from around the area
of the Fukushima Daiichi Nuclear Plant. Depending on how long the nation’s electrical
generating capacity is impaired, how long and how wide an area of evacuation because of
radiation danger is continued, whether a widespread nuclear event occurs, and how quickly
alternative sources can be found for critical electronic and automotive parts whose production has
been curtailed, the negative economic effects could grow.
In recent decades, Japan’s growth rate has lagged behind that of the world, so it has not been a
major contributor to global economic growth. The net impact of the disaster on global GDP,
therefore, is expected to be relatively small (about 0.5 percentage points) with about half of that
effect confined to Japan itself.
As for U.S.-Japan economic relations, earthquake-related events in Japan are still unfolding;
therefore, any economic impact assessments are at best preliminary. Nevertheless, it is likely that
the impact of the earthquake and ensuing events on the bilateral economic relationship will be

1 IHS Global Insight, Japan: Japan’s Earthquake: A Macroeconomic Damage Assessment, Country Intelligence -
Analysis, March 24, 2011.
2 Keiko Ujikane, “Japan Sees Quake Damage Bill of Up to $309 Billion, Almost Four Katrinas,” Bloomberg, March
23, 2011.
3 Data are updated daily. See Japan National Police Agency, Damage Situation and Police Countermeasures associated
with 2011Tohoku district - off the Pacific Ocean Earthquake
. http://www.npa.go.jp/archive/keibi/biki/higaijokyo_e.pdf
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

modest overall; however, the effects could be more profound in the near term and on specific
sectors and firms for which trade and investment with Japan is particularly important.
Japan plays a major role in global supply chains both as a supplier of parts and as a producer of
final products. In this age of just-in-time production processes, even a small disruption in the
provision of a single component can wreak havoc on an entire product line. Japan’s production of
automobiles, semiconductors, and electronics is likely to be affected the most, but companies in
the United States that rely on Japan for critical components such as electronic parts and batteries
or transmissions for electrical vehicles also will be affected. Tourist arrivals from Japan also are
expected to fall.
Figure 1. Persons Killed, Missing, and Homes Totally or Partially Damaged
As of March 23, 2011

Source: Underlying map from U.S. AID. Casualty and damage data from Japan, National Police Agency.
U.S. imports from and exports to Japan are temporarily being hindered because of shipping
bottlenecks and the nature of the disaster. In the medium term, a slowdown in growth in Japan is
likely to reduce U.S. exports there, but eventually rebuilding will require large amounts of
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

construction supplies. If imports of certain products from Japan become scarce, China, South
Korea, or other nations may gain at Japan’s expense. Trade data for Japan are presented in the
Appendix to this report.
The U.S. Food and Drug Administration has banned imports of spinach and kakina from the four
Japanese prefectures of Fukushima, Ibaraki, Tochigi, and Gunma and milk from Fukushima
prefecture only. All milk and milk products and vegetables and fruits produced or manufactured
from the four Japanese prefectures affected are to be detained upon entry into the United States
and not allowed to enter the U.S. food supply unless shown to be free from radionuclide
contamination.4 The European Union, Australia, Hong Kong, Philippines, Singapore, India, and
Canada have required increased surveillance of food products from Japan.
Figure 2. A Tug Boat among Debris in Ofunato, Japan

Source: U.S. Navy photo by Mass Communication Specialist 1st Class Matthew M. Bradley.
The value of the yen has been increasing, prompting coordinated intervention by the G-7
countries to halt excessive yen appreciation. A repatriation of assets back to Japan may put
upward pressure both on the yen and on U.S. interest rates if Japanese investors sell U.S. Treasury
and other securities.
The questions going forward include whether Japan’s debt burden will leave it unable to secure
the funds needed for rebuilding; whether the disaster has fundamentally altered the Japanese

4 U.S. Food and Drug Administration, What is FDA doing to ensure the safety of products imported from Japan?,
Radiation Safety/Questions about Food Safety, Washington, DC, updated March 23, 2011, http://www.fda.gov/
NewsEvents/PublicHealthFocus/ucm247403.htm.
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

economy and the competitive position of its industries relative to those in China, South Korea,
and other nations; what the impact will be on energy markets and the nuclear industry in Japan
and the world; how Japan and other countries should cope with large inflows of “hot money” that
can distort exchange rates; whether global supply chains can adjust to the loss of supply from
Japan; and how quickly Japan can regain its economic activity and rebuild its capital stock.
Since Japan has a history of severe earthquakes, its citizens and companies have made
considerable preparations and have recovered from previous disasters. The January 1995 Kobe
earthquake (6.8 magnitude) hit a region that was heavily industrialized and densely populated and
caused about $100 billion in damage. The immediate effect was a contraction in Japan’s economy
of 2.6% but a recovery that began the following month.5 The Kobe quake, however, did not
trigger a tsunami, a nuclear crisis, or severe shortages of electricity.
Economic Impact
The direct damage from Japan’s earthquake and tsunami has been concentrated in the northern
region of the country, some distance from Japan’s industrial heartland. The financial and
economic effects, however, are spreading through the Japanese economy and the East Asian
region and also may affect businesses and consumers in the United States. The effect of the
record 9.0 earthquake was compounded by the ensuing tsunami that swept as far as 6 miles inland
in Japan, causing widespread destruction, and spread out across the Pacific. It caused tens of
millions of dollars of damage in Hawaii, as much as $40 million in damage in California, and
millions of dollars of damage primarily to harbors and boats in Oregon. The damage,
furthermore, has been compounded by the potential nuclear contamination from the Fukushima
Daiichi Nuclear Plant plus a shortage of gasoline and of electricity that has caused rolling
blackouts in Japan’s industrial centers.
Japan’s economic growth, already anemic because of the global recession in 2008-2009, is
expected to drop into negative territory for a quarter or two but turn positive again as the crisis
passes and rebuilding commences. As the extent of the damage becomes more apparent, forecasts
for Japan’s economic growth are becoming more and more pessimistic. Initial expectations were
that the disaster would shave 0.2 to 0.5 percentage points off total GDP growth in 2011 but that
growth still would be around 1%. By March 23, an estimate by IHS Global Insight was for
growth in 2011 to be 0.5% with reconstruction in 2012 increasing it to about 3.5%.6 Morgan
Stanley, however, expects a short and deep recession in Japan with the economy shrinking by 1%
to 3% in 2011 and a reduction in global growth of about 0.5 percentage points.7

5 Kyohei Morita and Yuichiro Nagai, Japan Economic Focus, Economic implications of earthquake, Barclays Capital,
Japan Economic Research, March 15, 2011.
6 IHS Global Insight, Japan: Japan’s Earthquake: a Macroeconomic Damage Assessment, Country Intelligence -
Analysis, March 24, 2011.
7 Morgan Stanley MUFG, Tohoku Earthquake: First Assessment, Japan Research, New York, NY, March 22, 2011, p.
6.
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

Manufacturing
Typically, the negative effects of a natural disaster are large immediately after the event and are
mostly concentrated in the region of the disaster. In the case of Japan’s disaster, however, the
negative impact is greater because the estimated $309 billion (5.7% of GDP and less than 2% of
capital stock)8 or more in damage from the combination of the earthquake and tsunami is being
compounded by the evacuations and uncertainty from the problems at the Fukushima nuclear
reactors, the shortfall in electricity, and a scarcity of gasoline that is hampering rescue and
recovery efforts. In addition to the nuclear plants destroyed, other generating plants are expected
to remain offline until repairs are made and safety ensured. This has caused rolling blackouts
lasting as long as three to four hours at a time that have disrupted Japan’s production capacity in
its industrial heartland farther south in the Tokyo-Osaka corridor. While the visual images mainly
have been of the tsunami and its aftermath, the earthquake also damaged plants and equipment far
from its epicenter. Port facilities,9 sensitive electronic equipment, 2,035 roads, and 53 bridges also
were harmed. These were located in a wide area of the country that even reached Tokyo’s
northern suburbs.10 The human toll also has been great. An estimated 245,000 people are in
evacuation shelters; 243,000 homes are without power; and 720,000 homes are without potable
water.11
The three prefectures in eastern Tohoku that took the brunt of the earthquake and tsunami account
for about 6% to 7% of Japan’s GDP. The city of Sendai, with a population of roughly 1 million, is
in the middle of an agricultural region, but it still has a considerable number of industrial
facilities. The villages most damaged by the tsunami were engaged primarily in fishing, but
manufacturing accounts for about a quarter of production in the region,12 and plants in the most
severely damaged areas supply parts and products used in manufacturing elsewhere in Japan. As
of March 16, 2011, all 12 automakers in Japan reportedly had temporarily stopped production at
some plants. Companies such as Hitachi (equipment for power plants), Renesas Electronics
(semiconductors), NEC (electronics), Sony (electronics), and Fujitsu (computers) also had
suspended operations at certain plants in the affected area.13 Japan also supplies parts for
manufacturing in China, South Korea, and other Asian countries. As of March 25, Japanese oil
refiners had restored capacity in three of the six refineries that had halted production. The plants
restarted accounted for 17% of Japan’s domestic refining capacity and left 14% of capacity still
halted. However, since other refineries had been operating at below capacity, some production is
expected to be covered by other plants.14


8 World Bank, East Asia and Pacific Economic Update 2011, The Recent Earthquake and Tsunami in Japan:
Implications for East Asia, Washington, DC, March 21, 2011, http://siteresources.worldbank.org/
INTEAPHALFYEARLYUPDATE/Resources/550192-1300567391916/EAP_Update_March2011_japan.pdf.
9 Kesennuma and Ishonomaki ports are not operating.
10 Roads in Tokyo (16 roads) and in neighboring prefectures of Saitama (155) and Chiba (278) also were damaged.
-11 U.S. Department of State, Japan Earthquake Update 17, March 21, 2011.
12 Kyohei Morita and Yuichiro Nagai, Economic Implications of Earthquake, op. cit.
13 “Production Bases Destroyed by Quake. Manufacturers’ Plants, Distribution Facilities in Tohoku, Northern Kanto
Hit Hard,” Yomiuri Shimbun, March 16, 2011.
14 “Quake-Hit Refiners Restoring Fuel Supply,” Nikkei.com, March 25, 2011.
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

Some Business Disruptions
• A Hitachi factory north of Tokyo that makes 60% of the world’s supply of airflow sensors was shut down. This
caused General Motors to shut a plant in Shreveport, LA, for a week and Peugeot-Citroen to cut back
production at most of its European plants.
• Two Japanese plants accounting for 25% of the world’s supply of silicon wafers for computer chips were closed.
• A Toshiba plant making liquid crystal displays was damaged.
• Texas Instruments had to close a factory in Japan (until September 2011) accounting for about 10% of its
revenues.
• Hitachi Vehicle Energy, Ltd. announced it intended to resume production on March 28 of lithium ion car
batteries at its Ibaraki prefecture facility.
• Nippon Chemi-Con Corp., the largest producer of aluminum electrolytic capacitors used in everything from
computers to industrial equipment, has four Japanese factories that are down, so it intends to boost production
at 10 overseas bases, including factories in Indonesia, Malaysia, and China.
• Nihon Dempa Kogyo, the second-largest maker of quartz components (with a roughly 20% share of the global
market), is turning to operations in Malaysia and elsewhere to compensate for damage at its plant in northern
Japan, which assembles quartz components for automotive applications.
• Nissan is considering importing engines from its plant in Tennessee because its engine factory in Fukushima
prefecture has been damaged.
• Japan's major automakers are expected to produce about 400,000 fewer vehicles domestical y as a result of the
earthquake and tsunami.
• Delta Airlines, the largest foreign carrier in Japan, is cutting capacity to and through its Tokyo hub by 15% to 20%
through May and expects the crisis in Japan to reduce profits in 2011 by $250 million to $400 million.
Financial and Currency Markets
For the U.S. economy, the disaster in Japan came on top of the turmoil in the Middle East, rising
oil and food prices, and a weak recovery with unemployment hovering at 9%. It has added new
uncertainty to markets already under stress. The first effects have been financial as values on
stock markets dropped and paper values shrunk. Equity markets, however, are expected to
recover over time as the impact of a disaster is factored into risk calculations and the economic
effects become clear. Still the situation in Japan has added to instability in financial markets in the
United States and the world.
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

Figure 3. A Damaged Water Pipe Shoots into the Air, Hachinohe, Japan

Source: U.S. Navy photo by Chief Mass Communication Specialist Daniel Sanford.
The value of the yen and interest rates also are being affected. Investors, hedge funds, and
speculators have bought yen in anticipation that Japan’s wealth holders, insurance companies, and
possibly the government will have to repatriate overseas investments in order to finance insurance
payouts and rebuilding. The value of the yen (83.8 yen per dollar on February 15, 2011, and 122
yen per dollar less than four years ago) touched a record 76.25 yen per dollar on March 17 before
retreating to the 80 yen level. On March 18, the Group of Seven (G-7) nations agreed to
“cooperate as appropriate” to address excessive and volatile movements in the foreign exchange
market (in other words, to intervene in weakening the value of the yen). This decision was made
by monetary authorities in Japan, the United States, the eurozone, Canada, and Britain.15 Japan’s
Ministry of Finance argued that Japan’s life and casualty insurers already have secured
considerable funding and intend to tap domestic markets rather than repatriating funds from
overseas and that the strength of the yen was due to speculation.16 Any yen appreciation that does
occur would make Japanese exports less competitive in U.S. markets and U.S. exports more
competitive in Japanese markets. In addition, since China’s yuan has been linked closely to the
value of the dollar, Chinese exporters are likely to gain further price competitiveness relative to
those from Japan.
Approximately a quarter of developing East Asia’s long-term debt is denominated in yen. For
China, 8% of its external government debt is in yen. The figure for Thailand is about 60%, for

15 Dan Milmo, “G7 rallies behind Japan in bid to curb soaring yen,” The Guardian, March 18, 2011,
http://www.guardian.co.uk/business/2011/mar/18/g7-japan-curb-soaring-yen-intervention.
16 From an internal report by Medley Global Advisors, March 16, 2011.
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

Vietnam about 35%, for the Philippines about 32%, and for Indonesia about 30%. A 1%
appreciation in the value of the yen translates into a $250 million increase in annual debt
servicing on yen-denominated securities by East Asia’s developing countries.17
Another question deals with the impact on U.S. interest rates and how they might be affected by
changes in capital flows to and from Japan. Japanese investors are major private foreign holders
of U.S. Treasury securities that finance the U.S. national debt, and their importance has soared
over the last few years. At the end of 2010, Japanese residents held $882.3 billion in U.S.
securities. At one time, Japanese investors were the largest foreign holders of U.S. Treasury
securities, but beginning in September 2008, residents in China surpassed them and, as of the end
of 2010, held $1,160.1 billion in U.S. Treasury securities.18 Japanese holdings of U.S. Treasury
securities underscore the debtor/creditor link between the United States and Japan. As the U.S.
government continues to incur budget deficits and maintains a low national savings rate, the
United States has had to rely increasingly on foreign creditors to finance the rising national debt.
Some analysts have suggested that Japanese private and government investors in U.S. Treasury
securities may have to slow down or diminish their holdings to finance reconstruction operations
in Japan. Such a move could increase the interest rates that the U.S. government must pay to
finance its debt. Other analysts have suggested such an impact would be limited, as Japan should
have sufficient domestic capital to cover the extra expenses. As the disaster developed, the flight
to the safety of U.S. Treasury securities by investors all over the world more than offset any
repatriation of funds back to Japan.
The Bank of Japan has been injecting funds into the banking system to ensure that there would be
no shortage of cash or funds to lend and no spikes in Japan’s interest rates. As of March 17, the
bank had made liquidity injections of $418 billion (33 trillion yen) into financial markets. This far
exceeded the 4.5 trillion yen injected after the collapse of Lehman Brothers in 2008.19
In Japan, a concern is that the public debt at about 200% of GDP has become so high that
borrowing to finance reconstruction could trigger a loss of confidence in the ability of the
Japanese government to repay its debts. In such a case, Japan could face a sovereign debt crisis
similar to that faced by Greece. Prior to the earthquake, in January 2011, Standard & Poor’s, the
credit ratings agency, had already downgraded Japan’s long-term sovereign debt to AA- from AA.
This is three levels below the highest possible rating. This was S&P’s first downgrade of Japanese
government debt since 2002.20 When Greece faced a sovereign crisis in 2010, its national debt
was 123% of GDP. In Japan’s case, however, 95% of its national debt is owned by Japanese
citizens, not foreign hedge and other funds. According to one analyst, it is unlikely that those
citizens would dump their bond holdings if the government takes on more debt to rebuild the area
struck by the earthquake and tsunami. Financially, Japan’s government appears to have more
maneuvering room than might seem apparent by the debt ratios.21

17 World Bank, The Recent Earthquake and Tsunami in Japan: Implications for East Asia, March 21, 2011, op. cit.
18 U.S. Department of the Treasury, http://www.ustreas.gov/tic/.
19 Ibid.
20 Hiroko Tabuchi and Bettina Wassener, “S.&P. Downgrades Japan as Debt Concerns Spread,” The New York Times,
January 27, 2011, Internet edition. Moody’s gives Japanese government debt a similar rating.
21 Marcus Noland, Will the Crisis Create a New Japan?, Peterson Institute for International Economics, op-ed,
Washington Post, March 16, 2011.
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

Most insurance payments are expected to be borne primarily by Japanese insurance companies
and their government. Insurance companies everywhere, however, pass some of their risk
exposure onto global reinsurance providers. One early estimate of the insured damage from the
earthquake alone was $15 billion to $35 billion.22 Even property insurance claims of $50 billion,
however, would be equivalent only to about 10% of Japan’s insurance premium income and less
than 1% of insurance company assets.23 Added to the earthquake damage will be claims arising
from the tsunami, insured production losses, and possibly increased health costs from nuclear
contamination. Japanese insurers jointly own a reinsurer, the Japan Earthquake Reinsurance
Company, which in turn is backstopped by the Japanese government. Ultimately, the government
stands as the insurer of last resort in the case of earthquakes. As for individual homeowners, most
tend not to carry earthquake or flood insurance. Household rebuilding, therefore, is likely to come
out of household savings, some of which has been invested overseas.
Figure 4. Aerial View of Minato, Japan, a Week After the Tsunami

Source: U.S. Marine Corps photo by Lance Cpl. Ethan Johnson.

22 AIR Worldwide, AIR Worldwide Releases Preliminary Estimate of Insured Losses for the M9.1 Tohoku Earthquake,
Press Release, Boston, MA, March 13, 2011.
23 International Monetary Fund, Global Markets Analysis Division, Monetary and Capital Markets Division, Global
Markets Monitor
, Washington, DC, March 17, 2011.
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

Implications for the U.S.-Japan Economic
Relationship

The U.S.-Japan economic relationship is very strong and mutually advantageous. The two
economies are integrated via trade in goods and services—they are important markets for each
other’s exports and important sources of imports. Japan and the United States are also connected
via capital flows. Japan is a major foreign source of financing of the U.S. national debt and will
likely remain so for the foreseeable future, as the mounting U.S. debt needs to be financed and the
stock of U.S. domestic savings remains insufficient to meet the demand. Japan is also a
significant source of foreign private portfolio and direct investment in the United States, and the
United States is the origin of much of the foreign investment in Japan.
Japan and the United States remain important trading partners to one another; however, their
relative importance has declined over the years as other trading partners have increased their
importance. In 1996, Japan accounted for 10.8% of U.S. exports and 14.8% of imports, but for
only 4.7% of U.S. exports and 6.3% of U.S imports by 2010. In 1996, the United States
accounted for 27.2% of Japanese exports and 22.7% of Japanese imports, but for only 15.4% of
Japanese exports and 9.7% of Japanese imports by 2010. The diminished importance has been the
result in part of the development of international production networks and the segmentation of
production processes across countries giving rise to China as a important trading partner for both
the United States and Japan.
An important factor in determining the volume of trade flows is the relative growth rates in each
of the trading partners. For example, in 2009, both U.S. exports to Japan and imports from Japan
declined substantially, reflecting the effects of the global economic downturn. The crisis was
particularly hard on a Japan that was trying to recover from more than a decade and a half of
economic stagnation. In 2010, U.S.-Japan trade showed signs of recovery as both the U.S. and
Japanese economies grew, 2.9% and 4.0%, respectively.24 If, as expected, the Japanese economy
experiences slower economic growth as a result of the earthquake-related crisis, U.S. exports
could decline, depending on the extent of the impact. A major portion of U.S. exports to Japan
consists of optical and medical equipment; computers and components; semiconductors; and
agricultural products, such as meat and wheat. Many economists expect Japanese economic
growth to rise as the country begins to recover from the damage.25
Some sectors of U.S.-Japan trade are likely to be affected. For example, close to 35% of U.S.
imports from Japan in 2010 consisted of passenger cars and auto parts. Some Japanese auto
manufacturers, such as Toyota Motor Corp., have assembly operations in the immediate vicinity
of the earthquake. Other manufacturers who may not be directly located in the earthquake area
have been affected by power outages and other effects of the disaster and have had to curtail
operations, reducing output. Japanese auto manufacturers have also been adversely affected by
disruption of operations of parts suppliers.26

24 Economist Intelligence Unit.
25 According to one estimate, Japan’s GDP growth could be reduced by 0.3% resulting in no growth for the current
quarter. Global Insight. Japan’s March 2011 Earthquake: Disruption, Risks and Outlook, March 16, 2011. Another
estimate puts the loss at 0.5% GDP. Standard Charted Research, Japan—Assessing the Impact ,March 15, 2011.
26 Automotive News, March 14, 2011.
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

In addition, U.S.-based auto manufacturers may also be affected by the problems in Japan. Some
Japanese-owned companies in the United States have had to curtail operations because they
cannot obtain parts from Japan. For example, some models assembled in the United States by
Toyota, Mitsubishi, Nissan, and Mazda import engines and/or transmissions from Japan.27 Also,
some U.S.-name plate manufacturers have been affected. For example, Ford Motor Co. depends
on imports of Japanese-made memory chips and batteries. In addition, a significant portion of
U.S. imports from Japan are in machinery (20.6%), including printers and computers, and
electrical machinery (15.2%), including semiconductors, shipments of which could be interrupted
because of the crisis. The full extent of the effects of the problems in Japan is yet to be
determined.28
In 2010, Japanese suppliers accounted for more than one-fifth of global semiconductor
production, and companies headquartered in Japan generated $63.3 billion in microchip revenue.
This represented 20.8% of the worldwide market. Not all of the actual production, however, is
located in Japan.29
Tourism also is likely to be affected. Hawaii already has experienced cancellations of tours from
Japan. Japanese tourists accounted for $1.9 billion in revenue in Hawaii, 18% of tourist arrivals
there, and numbered second only to arrivals from other parts of the United States.30 For the
United States as a whole, about 3.5 million tourists from Japan arrived in 2010, placing Japan in
fourth place after Canada, Mexico, and the United Kingdom.31
The Obama Administration has engaged in discussions with Japan regarding the possibility of
Japan joining negotiations to establish the Trans-Pacific Partnership (TPP) Initiative. Before the
March 11 earthquake, the government of Prime Minister Kan indicated it would make a decision
on TPP by this June. However, some members of the Japanese Diet have indicated that that
decision may have to be delayed as a result of the disaster.32
Legislative Activity
H.Res. 172 (Honda). Expressing heartfelt condolences and support for assistance to the people of
Japan and all those affected in the aftermath of the deadly earthquake and tsunamis of March 11,
2011.
S.Res. 101 (Reid) A resolution expressing the sense of the Senate relating to the March 11, 2011,
earthquake and tsunami in Japan.

27 National Highway Administration, http://www.nhtsa.gov.
28 Automotive News, March 15, 2011.
29 E-mail communication from Dale Ford, Senior Vice President, Market Intelligence, IHS iSuppli company. March 17,
2011.
30 “Japan crisis ‘terrible’ for Hawaii tourism,” UPI.com, March 17, 2011.
31 U.S. Department of Commerce, International Trade Administration, Table C - Section 5: United Kingdom, Japan, S.
Korea, PRC (EXCL Hong Kong), ROC(Taiwan) Non-Resident Visitation to the U.S. By world region/country of
residence 2010
, 2010 Monthly Tourism Statistics, Washington, DC, Data through November 2010,
http://tinet.ita.doc.gov/view/m-2010-I-001/table5.html.
32 Washington Trade Daily, March 25, 2011.
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Appendix.
Table A-1. Japanese Top Merchandise Exports by Market Country
Millions of U.S. Current Dollars





% Share
Rank
Country
2008 2009 2010
2008
2009
2010
0 —World—
781,952.3 580,465.4 770,112.2 100.0
100.0
100.0
1
China
124,952.2
109,576.6
149,692.3
16.0
18.9
19.4
2
United States
137,306.0
93,624.2
118,798.2
17.6
16.1
15.4
3
Korea, South
59,418.2
47,217.0
62,299.1
7.6
8.1
8.1
4
Taiwan
46,033.6
36,409.8
52,474.2
5.9
6.3
6.8
5
Hong Kong
40,280.6
31,858.7
42,315.2
5.2
5.5
5.5
6
Thailand
29,491.5
22,247.9
34,235.6
3.8
3.8
4.5
7
Singapore
26,627.5
20,694.3
25,236.7
3.4
3.6
3.3
8
Germany
23,984.3
16,646.2
20,445.2
3.1
2.9
2.7
9
Malaysia
16,436.8
12,859.1
17,643.1
2.1
2.2
2.3
10
Netherlands
21,077.0
13,512.5
16,399.5
2.7
2.3
2.1
Source: Japan Customs via Global Trade Atlas.
Note: Countries ranked by trade value in 2010.
Table A-2. Japanese Top Merchandise Imports From Source Countries
Millions of Current U.S. Dollars





% Share
Rank Country
2008
2009
2010
2008
2009
2010
0 —World—
762,487.7 551,787.9 692,844.6
100.0 100.0 100.0
1
China
143,657.2
122,514.5
153,370.1
18.8
22.2
22.1
2
United States
77,666.9
58,959.1
67,400.1
10.2
10.7
9.7
3
Australia
47,677.2
34,729.6
44,805.6
6.3
6.3
6.5
4
Saudi Arabia
50,840.8
29,192.0
35,890.3
6.7
5.3
5.2
5
United Arab Emirates
46,759.0
22,713.8
29,280.6
6.1
4.1
4.2
6
Korea, South
29,500.7
21,977.6
28,641.8
3.9
4.0
4.1
7
Indonesia
32,555.1
21,810.6
28,113.8
4.3
4.0
4.1
8
Taiwan
21,824.6
18,336.6
23,073.8
2.9
3.3
3.3
9
Malaysia
23,241.2
16,726.6
22,708.1
3.1
3.0
3.3
10
Qatar
26,422.4
15,924.2
21,697.0
3.5
2.9
3.1
Source: Japan Customs via Global Trade Atlas.
Note: Countries ranked by import value in 2010.
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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

Table A-3. Japanese Top Surplus Balance Countries
Millions of Current U.S. Dollars
Rank Country
2008
2009
2010
0
—World—
19,464.6 28,677.5 77,267.5
1
United States
59,639.1
34,665.0
51,398.1
2
Hong Kong
38,718.8
30,760.4
40,794.9
3
Korea, South
29,917.6
25,239.4
33,657.4
4
Taiwan
24,209.0
18,073.2
29,400.4
5
Singapore
18,734.8
14,589.1
17,081.3
6
Panama
10,952.7
12,641.4
15,004.8
7
Thailand
8,678.5
6,225.0
13,210.8
8
Netherlands
17,255.2
10,055.1
12,445.4
9
United Kingdom
8,974.6
6,123.4
7,874.2
10
Mexico
6,137.0
4,037.7
5,979.6
Source: Japan Customs via Global Trade Atlas.
Note: Countries ranked by 2010 balance data.

Table A-4. Japanese Top Deficit Balance Countries
Millions of U.S. Current Dollars
Rank Country
2008
2009
2010
1
Saudi Arabia
-42,941.6
-23,801.2
-29,407.0
2
Australia
-30,389.3
-22,548.7
-28,960.7
3
United Arab Emirates
-35,872.2
-16,222.6
-21,946.9
4
Qatar
-24,391.2
-14,295.9
-20,555.9
5
Indonesia
-19,947.6
-12,481.7
-12,192.0
6
Iran
-16,336.0
-7,655.0
-9,080.2
7
Kuwait
-13,117.7
-7,744.6
-8,870.8
8
Russia
3,112.3
-5,560.9
-8,100.3
9
Malaysia
-6,804.4
-3,867.5
-5,065.0
10
Chile
-5,166.4
-3,954.9
-4,849.5
Source: Japan Customs via Global Trade Atlas.
Note: Countries ranked by 2010 balance values.



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Japan’s 2011 Earthquake and Tsunami: Economic Effects and Implications for the U.S.

Table A-5. World Top Five Exporting and Importing Countries
Merchandise Trade, All Commodities, Calendar Years 2008-2010

Top Five Reporting Countries Exports with World, Ranked by 2010 Exports
Millions of Current United States Dollars
% Change
% of Total
Country
2008
2009
2010
2010/2009
2010
World
Total
15,426,934 11,794,981 12,592,915
6.8
100.0
China
1,428,319 1,201,663 1,577,941 31.3
12.5
USA
1,287,442 1,056,043 1,277,504 21.0
10.1
Germany 1,448,973 1,120,639 1,268,890 13.2
10.1
Japan
781,952 580,465 770,112 32.7
6.1
Netherlands
638,503 498,503 573,352 15.0
4.6






Top Five Reporting Countries Imports from World, Ranked by 2010 Imports
Millions of Current United States Dollars
% Change
% of Total
Country
2008
2009
2010
2010/2009
2010
World
Total
15,950,342 12,041,608 12,854,666
6.8
100.0
USA
2,103,641 1,559,625 1,912,092 22.6
14.9
China
1,133,388 1,005,555 1,394,813 38.7
10.9
Germany 1,185,536 925,833
1,066,723 15.2
8.3
Japan
762,488 551,788 692,845 25.6
5.4
France
716,502 559,895 606,168 8.3
4.7
Source: CRS with National Trade Reporting Agencies via Global Trade Atlas.
Notes: Statistics based on countries reporting as of 3/22/2011.


Author Contact Information

Dick K. Nanto, Coordinator
J. Michael Donnelly
Specialist in Industry and Trade
Information Research Specialist
dnanto@crs.loc.gov, 7-7754
mdonnelly@crs.loc.gov, 7-8722
William H. Cooper

Specialist in International Trade and Finance
wcooper@crs.loc.gov, 7-7749


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