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Current Price Topics

The Impact of the 

Earthquake in Japan on

U.S. Imports

Import and Export Prices: Third Quarter 2011

U.S. Bureau of Labor Statistics October 2011 Volume 2, Number 9

On March 11, 2011, northeast Japan was hit 

with the strongest recorded earthquake in 

that nation’s history, measuring 9.0 on the 

Richter scale. The earthquake and subsequent 

tsunami, which together left more than 20,000 

people dead or missing, also damaged much of 

Japan’s infrastructure, especially the country’s 

electric power grid.1

 The economic impact of 

the disaster on Japan, including its impact on 

the Japanese export trade to the United States, 

remained uncertain at the time, in terms of both 

the availability and prices of Japanese goods.

Despite this uncertainty, and that of the 

impact of the quake on the world economy, 

a major earthquake in Japan is not 

unprecedented. The Hanshin earthquake 

that hit Kobe on January 17, 1995, offers 

some insight into what might be expected 

this time. Although that incident was a 

considerably smaller seismic event, measuring 

6.8 on the Richter scale, the affected regions 

made up 12.4 percent of Japan’s GDP at the 

time, compared with 7.8 percent in the less 

industrialized northeast region that bore 

the brunt of the recent disaster. In 1995, 

despite extensive damage in the region of the 

quake, Japanese output actually increased 

in February and March 1995, following a 

1-month drop in production. Even in Kobe, 

manufacturing output was at 98 percent 

of prequake levels within 18 months of the 

disaster.2

What was different with the 2011 earthquake 

was the impact on Japan’s overall power grid 

from the damage done to a major nuclear 

powerplant. That damage led to rolling 

blackouts which, combined with the damage 

from the quake, forced a number of major 

companies, such as Toyota, Sony, Honda, 

Nissan, Toshiba, and Texas Instruments, to 

either shut down or cut back production 

at multiple plants.3

 Industrial production 

in Japan, which had risen 1.9 percent from 

January 2010 to February 2011, plunged 

6.4 percent in March in the aftermath of the 

disaster.4

 Once the power grid was largely 

restored, and thanks in part to the spareproduction capacity in Japan, industrial 

production recovered to nearly the February 

level by July.

Interestingly, the value of Japanese exports 

actually increased in March 2011, but largely 

because goods had already left Japanese 

ports at the time of the earthquake. Exports 

did fall sharply the next 2 months, and in 

May were 10.3 percent below the value of 

what was exported the previous May. In 

subsequent months, the value of exports 

recovered: August recorded a 12-month 

increase of 2.8 percent, the first 12-month 

advance in the measure since February. 

Despite the August increase in the value of 
CURRENT PRICE TOPICS

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One way to look at the impact of the disaster 

on import trade from Japan is to compare the 

percentage of U.S. imports coming from Japan 

for each of the industries shown in the table 

in the months after the earthquake with the 

percentage of U.S. imports from Japan in 2010. 

As seen in table 2, the impact on the top five 

such product areas varied.

For some product areas, there was very little 

change in the percentage of U.S. imports from 

Japan relative to imports from the rest of the 

world in the 5 months following the earthquake. 

The percentage of imported machinery 

and mechanical appliances coming to the 

United States from Japan actually increased. 

Import trade from Japan for different types of 

instruments and electrical machinery did fall off 

to some extent relative to imports from other 

trading partners, but by less than 10 percent 

of the 2010 percentages. In contrast, the two 

product areas for which the percentage of 

trade from Japan was the largest in 2010, motor 

vehicles and motor vehicle parts, saw the largest 

drop. The share of motor vehicles imported 

exports Japan recorded a 10.1 billion dollar 

trade deficit, that same month because of 

a surge in the value of imports, which was 

12.4 percent higher in August than at the 

same point in 2010.5

 Much of the increase 

in imports has been in the form of higher 

fuel imports in an effort to make up for the 

electricity supply shortages that resulted 

from the closing of the Fukushima nuclear 

powerplants.6

As regards trade with the United States, Japan 

is the world’s third-largest economy and ranks 

as the fourth-largest import trading partner of 

the United States.7

 In 2010, the United States 

imported more than 120 billion dollars of 

merchandise goods from Japan, representing 

6.3 percent of overall imports.8

 As can be seen 

in table 1, five broad harmonized product 

categories—motor vehicles; machinery and 

mechanical appliances (including computers); 

electrical machinery; motor vehicle parts; 

and optical, photographic, measuring, and 

medical instruments—made up almost threequarters of total U.S. import trade with Japan.

Table 1. Imports to the United States from Japan, by product area, 2010

Product area Value of trade,

billions of dollars

Percentage of total 

imports from Japan

All commodities $121 100.0

Motor vehicles designed to transport people 32 26.4

Machinery and mechanical appliances 25 20.7

Electrical machinery 18 14.9

Parts of motor vehicles 7 5.8

Optical, photographic, measuring, and medical instruments 6 5.0

All other imports from Japan 31 25.6

SOURCE: U.S. Bureau of the Census, Foreign Trade Division.
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Chart 1 shows the dollar value of total imports 

from Japan to the United States, as well as 

motor vehicles by month, since the beginning 

of 2011. In March, when the earthquake hit, 

the dollar value of trade from Japan increased. 

Much of the trade bound for the United States 

was already in transit then and was unaffected 

by the disaster. By April and May, however, 

the impact was dramatic. The value of motor 

vehicle trade from Japan plunged 69.4 percent 

from March to April and then a further 16.9 

percent the next month. By comparison, 

imports of motor vehicles from the rest of the 

world fell over those 2 months, but only by 

10.1 percent. Much of the impact, though, was 

temporary. By July, the dollar value of imported 

motor vehicles from Japan was nearly at the 

average monthly dollar value in 2010. The same 

month-to-month pattern of trade was true for 

total imports coming from Japan as well.

Given the changes in import percentages 

caused by the earthquake and tsunami, 

from Japan fell from almost 28 percent in 2010 

to slightly more than 20 percent in the months 

following the earthquake.

Given how dramatic the drop in trade was for 

motor vehicles, that product area bears a closer 

look. Japan is a major producer of automobiles 

on the world market. Of the nearly 14 million 

autos Japan produced in 2010, approximately 

9 million were sold overseas.9

 For the year, the 

United States imported more than 32 billion 

dollars worth of motor vehicles from Japan, 

second only to Canada and more than the 

next two trade partners combined.10 When 

the earthquake first hit in March, a number 

of the Japanese automakers were forced to 

halt production. The largest, Toyota, halted 

approximately 45 percent of global production 

at one point in time.11 Even if Japanese 

producers had been able to operate at full 

capacity, they wouldn’t have been able to ship 

any automobiles because many of the ports 

from which cars are shipped were destroyed.

Table 2. Change in trade from Japan after February 2011

Product Area

Percentage of total 

U.S. imports from 

Japan, 20101

Percentage of total U.S. 

imports from Japan, 

March–July 2011

Percent change in 

composition imports 

of from Japan

All commodities 6.3 5.3 -15.9

Motor vehicles designed to transport people 27.8 20.2 -27.3

Machinery and mechanical appliances 10 10.1 1.0

Electrical machinery 7.1 6.5 -8.5

Parts of motor vehicles 17.2 14.7 -14.5

Optical, photographic, measuring, and medical 

instruments 10.4 9.9 -4.8

1 For each industry, the percentage of import trade from Japan was calculated by taking the total dollar value of imports from 

Japan for that industry and dividing it by the total dollar value of all U.S. imports for the industry.

SOURCE: U.S. Bureau of the Census, Foreign Trade Division.
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a series of indexes that measure price changes 

by locality of import. Chart 2 compares the 

locality-of-origin index for imports from Japan 

with the import price index for all imports 

excluding fuels.13 Import prices from Japan 

rose 0.4 percent in the second quarter of 2011, 

following the earthquake in March, compared 

with 1.3 percent the previous quarter. For the 

quarter ended in September, import prices 

from Japan increased an even more modest 

0.2 percent, the smallest quarterly advance 

for the index since prices last fell, in the third 

quarter of 2008. By comparison, prices for all 

imports to the United States, excluding fuel, 

rose 1.2 percent in the second quarter and 

0.7 percent in the third. One reason import 

prices from Japan may not have risen as much 

as expected is that the disruption in supplies 

was brief. Another is that demand for imports 

from Japan may have fallen in addition to 

supply. While the overall dollar value for U.S. 

imports advanced from March to July, for the 

what impact has there been on the price 

of imports from Japan? Because Japan is 

an important trading partner of the United 

States, any change to the price of imports 

from Japan could also affect overall U.S. 

price levels. Typically, if the supply of a good 

drops dramatically, the price of that good will 

increase because demand will be higher than 

supply in the short run. An additional factor 

that had an influence on import prices in the 

months following the earthquake was that the 

U.S. dollar lost 2.9 percent of its value relative 

to the Japanese yen between March and July.12

A weaker currency generally results in import 

prices increasing, because more dollars are 

needed to purchase the same amount of yen. 

So, did the price of Japanese imports to 

the United States rise, as would have been 

expected given fewer supplies and a weaker 

dollar? The answer is yes, but surprisingly 

little. The Bureau of Labor Statistics produces 

0 

200

400

600

800

1,000 

1,200 

1,400 

Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011

Total imports from Japan Imports of motor vehicles from Japan 

Chart 1. Dollar value of U.S. imports from Japan, January 2011–July 2011 

SOURCE: U.S. Bureau of the Census 

Millions of dollars
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exchange rate, on average, will pass through 

to the dollar price of the import.16

Finally, although overall import prices from 

Japan may not have moved much, prices of 

automobiles imported from Japan could show 

a different story if more information were 

available. Currently, import price indexes by 

locality of origin are published only at the 

aggregate level. More detailed indexes would 

allow for a more detailed analysis, breaking 

down import prices from Japan into some of 

the major product areas. 

In sum, although the initial impact of the 

earthquake in Japan had a definite impact on 

import trade to the United States, that impact 

was of a short duration. The impact also was 

greater for some product areas—notably 

motor vehicles and motor vehicle parts—than 

others. Finally, overall import prices from 

Japan did not increase at an accelerated rate 

following the disaster.

top five product areas for which the United 

States imports from Japan, U.S. imports from 

the rest of the world fell 5.9 percent.14 The 

United States imported less from all countries 

in those product areas, not just Japan. A third 

reason that prices may not have increased 

any more than they did is that approximately 

78.3 percent of imports from Japan were 

trades between related parties (a company 

and its subsidiary) in 2010.15 Prices tend to be 

less volatile when companies trade with their 

subsidiaries. So, why didn’t the falling value 

of the dollar versus the yen have more of an 

impact? The chief reason is that the trend 

of the dollar falling relative to the Japanese 

yen did not begin in March. Rather, the trend 

dates back to mid-2007; thus, it was already 

an entrenched pattern by the time of the 

earthquake. Furthermore, the majority of U.S. 

imports are priced in dollars, and according to 

a recent study, for items priced in U.S. dollars, 

only about 25 percent of the change in the 

0.0 

0.5 

1.0 

1.5 

2.0 

2.5 

Sep 2009 Dec 2009 Mar 2010 Jun 2010 Sep 2010 Dec 2010 Mar 2011 Jun 2011 Sep 2011

Import prices from Japan All import prices excluding fuel

Chart 2. Percent change in import prices from Japan, including and excluding fuel, 

September 2009 to September 2011, quarterly data 

SOURCE: U.S. Bureau of Labor Statistics 

Percent change
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Current Price Trends

Quarterly Price Highlights

safe havens such as gold. On August 17, the U. 

S. Department of Energy’s Energy Information 

Administration announced that the nation’s 

crude supplies had increased by 4.2 million 

barrels, to 354.0 million barrels.19 The increase 

in crude supplies reflected a decline in demand 

and heightened already growing fears that the 

domestic economy was heading toward another 

recession. In response to the growing supply and 

the U.S. Federal Reserve’s plans to keep shortterm interest rates near zero, oil prices fell.20

Lower natural gas prices also contributed 

to the decline in fuel prices, falling 0.7 

percent over the third quarter of 2011. A 

combination of factors, such as abundant 

shale gas, sluggish demand, and slowed 

industrial activity, contributed to the decline 

in prices as well.21 Despite the decline 

during the quarter, natural gas prices have 

increased 8.0 percent from September 2010 

to September 2011.

Nonfuel Import Prices

Import prices excluding fuels increased 0.7 

percent over the third quarter of 2011. As is 

illustrated in chart 3, rising prices for nonfuel 

industrial supplies and materials, as well as for 

consumer goods, drove the overall increase 

in nonfuel prices. Increasing prices for foods, 

feeds, and beverages and for capital goods 

also contributed to the increase, although to a 

much smaller extent.

The price index for nonfuel industrial supplies 

and materials rose 2.1 percent for the quarter 

ended in September. Gold prices were the 

most significant contributor to the increase. 

Economic uncertainty has led to gold and 

other precious metals becoming an attractive 

Import Prices

The price index for overall imports ticked up 0.2 

percent in the third quarter of 2011, following 

a 2.1-percent increase in the second quarter. 

The increase in import prices was driven by 

a 0.7-percent advance in the price index for 

nonfuel imports. Falling prices for fuels and 

lubricants during the quarter largely offset the 

rise in nonfuel prices. 

Fuel Import Prices

The price index for fuels and lubricants 

decreased 1.3 percent in the third quarter 

of 2011, the first quarterly decline since the 

index fell 6.3 percent in the second quarter 

of 2010. The quarterly decline was brought 

about by a 1.4-percent decline in August, 

while in July and September the index ticked 

up 0.1 percent each month.

Petroleum prices decreased 1.1 percent in the 

third quarter, led by a 1.6-percent advance in 

August. The decline was driven by a combination 

of economic fears regarding the state of 

the global economy in general and that of 

the United States in particular. On August 5, 

Standard & Poor’s downgraded the United States’ 

AAA credit rating for the first time.17 The reaction 

to the news was swift: concerns regarding 

the repercussion of the downgrade and the 

ramifications it would have on the U.S. and 

global economies sent oil prices downward.18

The decrease in oil prices was part of a general 

decline in equities as investors sought traditional 
CURRENT PRICE TRENDS

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Agricultural Export Prices

The third-quarter decline in agricultural 

commodity prices was brought about by a 

steep drop in the price of cotton, which fell 19.2 

percent over the quarter. Previously, the price 

index for cotton had increased through the 

first quarter of 2011. The resulting high prices 

encouraged farmers to plant a record 93 million 

acres of cotton worldwide; the additional supply 

has helped bring about a sharp decline in the 

price.23 A simultaneous drop in demand also 

contributed to the decline.24

Nonagricultural Export Prices

The price index for nonagricultural exports 

increased 0.8 percent in the third quarter of 

2011, following a 1.7-percent increase in the 

previous quarter. As shown in chart 4, prices 

of nonagricultural industrial supplies and 

materials were the primary contributor to 

the index’s movement. Prices for consumer 

refuge for investors.22 Prices for consumer 

goods advanced 0.9 percent in the third 

quarter. The increase in gold prices similarly 

affected prices for jewelry.

Prices of capital goods, as well as of foods, 

feeds, and beverages, each increased 0.3 

percent for the third quarter. The price index 

for automotive vehicles remained unchanged.

Export Prices

The price index for overall exports increased 0.7 

percent for the 3 months ended in September, 

following a 1.4-percent increase in the previous 

quarter. Prices of agricultural commodities 

declined 0.3 percent in the third quarter of 

2010, after falling 0.7 percent in the second 

quarter, while nonagricultural export prices 

increased 0.8 percent for the quarter ended 

in September. Prices for all nonagricultural 

commodity groups except capital goods 

increased during the third quarter. 

0.28 

0.09 

0.38

0.03 

0 0.1 0.2 0.3 0.4 0.5 

Consumer goods, excluding automotives 

Automotive vehicles

Capital goods

Industrial supplies and materials, 

 excluding fuel

Food, feeds, and beverages

SOURCE: U.S. Bureau of Labor Statistics Percent change contribution

NOTE: Because of rounding, figures do not sum to total.

Chart 3. Major contributors to the 0.7-percent increase in nonfuel import 

prices, third quarter 2011 

0.0
CURRENT PRICE TRENDS

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declined 0.1 percent, the first quarterly 

decrease since the index fell 0.3 percent in 

the second quarter of 2010. 

For more information, contact Dave Mead at 

(202) 691-7154 or by email mead.dave@bls.gov, 

or Edwin Bennion at (202) 691-7142 or by email 

bennion.edwin@bls.gov.

goods also contributed to the overall 

increase, although to a lesser extent. 

The price index for automotive vehicles 

increased 1.0 percent for the quarter ended 

in September, the largest quarterly increase 

since a similar increase of 1.0 percent in the 

fourth quarter of 1995. Capital goods prices 

0.16

0.08 

-0.05

0.54 

-0.1 0 0.1 0.2 0.3 0.4 0.5 0.6

 Consumer goods, 

excluding automotive

Automotive vehicles 

Capital goods

Nonagricultural industrial 

 supplies and materials

SOURCE: U.S. Bureau of Labor Statistics Percent change contribution

NOTE: Because of rounding, figures do not sum to total.

Chart 4. Major contributors to the 0.8-percent increase in nonagricultural export 

prices, third quarter 2011 

Notes

1Armand Vervaeck and James Daniel, “Japan Tohoku Tsunami and Earthquake: The death toll is climbing again,” Earthquake 

Report, Aug. 15, 2011, http://earthquake-report.com/2011/08/04/japan-tsunami-following-up-the-aftermath-part-16-june/.

2Bill Witherell, “Tohuko vs. Kobe Economic Impact of Japan’s Earthquake,” Financial Sense, Mar. 14, 2011, http://earthquakereport.com/2011/08/04/japan-tsunami-following-up-the-aftermath-part-16-june.

3Andrew Dowell, “Japan: The Business Aftershocks from Chips to Banks, Companies Scramble,” The Wall Street Journal, Mar. 25, 

2011, http://online.wsj.com/article/SB10001424052748704461304576216950927404360.html. 

4 Japan Ministry of Economy Trade and Industry: Japan Industrial Production, http://www.meto.go.jp/english/statistics/tyo/

zenkatu/index.html. Note that industrial measures changes in output for the industrial sector of the Japanese economy, which 

includes manufacturing, mining, and utilities, but does not include agriculture.

5 Japan Ministry of Finance: Japan Export and Import Trade, http//www.customs.go.jp/tonkei/Info/index_e.htm. 

6 Dinakar Sethuraman, “LNG Surges as Japan Vies with China, Exxon’s Shipments Grow,” Bloomberg, Sept. 19, 2011, http://www.

bloomberg.com/news/2011-09-19/lng-price-boom-seen-as-japan-vies-with-china-while-exxon-s-shipments-grow.html.
CURRENT PRICE TRENDS

9

7 Japan is also the fourth-largest export trade partner of the United States, but the discussion here is limited to the impact on import 

trade because export trade from the United States to Japan was not significantly affected by the earthquake. 

8 United States Census Bureau: USA Trade Online, http://www.usatradeonline.gov.

9 Dowell, “Japan: The Business Aftershocks from Chips to Banks, Companies Scramble.”

10 United States Census Bureau: USA Trade Online.

11William Alden, “Japan Disaster Threatens Economic Recovery, Affects Economics Globally,” The Huffington Post, Mar. 23, 2011, 

http://www.huffingtonpost.com/2011/03/15/japan-earthquake-economy_n_835874.html.

12 Federal Reserve Bank of St. Louis: Federal Reserve Economic Data, http://research.stlouisfed.org/fred2/series/

EXJPUS?cid=95.

13 Fuels are excluded here because the industry that produces them is a comparatively volatile industry which makes up 

approximately 27 percent of overall U.S. imports, but very little of what is imported from Japan. 

14 United States Census Bureau: USA Trade Online.

15 U.S. Bureau of the Census: U.S. Imports for Consumption for Selected World Areas and Top 10 Countries — 2010, www.census.

gov/foreign-trade/Press_Release/2010pr/aip/related _party. By comparison, only 43.7 percent of imports from the Pacific Rim, 

which includes Japan, were related party trade in 2010.

16 Gita Gopinath, Oleg Itskhoki, and Roberto Rigobon, “Currency Choice and Exchange Rate Pass-Through,” The American 

Economic Review, Mar. 2010, pp. 304–36.

17Zachary A. Goldfarb,”S&P Downgrades U.S. Credit Rating for First Time” The Washington Post, Aug. 6, 2011.

18Christopher Johnson, “Oil Falls Over $4 as US Downgrade Spurs Growth Fears” Reuters, Aug . 8, 2011

19Weekly Petroleum Status Report (U.S. Energy Information Administration), Aug. 17, 2011, http://205.254.135.24/oil_gas/

petroleum/data_publications/weekly_petroleum_status_report/wpsr.html.

20Mark Shenk, “Oil Heading for Fourth Weekly Decline; Brent Extends Record,” Bloomberg, Aug. 19, 2011, http://www.

bloomberg.com/news/2011-08-19/oil-heading-for-fourth-weekly-decline-in-new-york-brent-spread-at-record.html.

21 Jon Chavez, “Natural Gas Prices Fall as Ohio, PA Supply More,” The Toledo Blade, Sept. 9, 2011, http://www.toledoblade.com/

Energy/2011/09/23/Natural-gas-prices-fall-as-Ohio-Pa-supply-more.html.

22 Hibah Yousuf, “Gold Hits New Record Near $1830 an Ounce,” CNN Money, Aug. 18, 2011, http://money.cnn.com/2011/08/18/

markets/gold_prices/index.htm.

23 Gregory Meyer, “Cotton’s Volatile Run Set to Continue,” The Financial Times, June 25, 2011, http://www.ft.com/intl/cms/s/0/

a7540cdc-b696-11e0-ae1f-00144feabdc0.html.

24Elizabeth Holmes and Carolyn Cui, “Tumble in Cotton Prices, New Wrinkle for Apparel Makers,” The Wall Street Journal, July 

22, 2011, http://online.wsj.com/article/SB10001424053111903554904576458270983393048.html.