Iron and steel had been a leading industry in Japan and had been considered critical to economic growth by the Japanese government in the 1950s. This attitude, exemplified by government loans offered at favorable rates, led to rapid modernization and expansion of the domestic industry. By 1970 iron and steel were the leading exports from Japan, accounting for over US$2.8 billion, or 14.7 percent, of total exports. This export share peaked in 1974, at 19 percent. Because of both the domestic industry's strength and import barriers, imports of iron and steel represented a minimal US$276 million in 1974. Japan's success in this industry, however, generated large imports of raw materials--iron ore and concentrates, and coking coal. Iron and steel were a classic case of a processing trade, with Japan importing raw materials, building state-of-the-art, integrated steel plants at harborside, and exporting part of the output to the rest of the world.
Iron and steel products were the object of major trade disputes in the 1970s. The United States steel industry alleged that Japan engaged in dumping to increase its market share in the United States. These disputes led to various responses. In 1978 the United States government instituted the "trigger price mechanism": when iron and steel imports reached a certain low price, the United States would initiate dumping investigations, effectively setting a minimum price for imports. These prices were based on estimates of Japanese production costs, because the Japanese were assumed to be the lowest-cost producer in the world. This system lasted until the early 1980s and was replaced in 1984 by a set of voluntary export restraints negotiated separately with major suppliers of iron and steel to the United States. Japan's shipments to the United States remained subject to these restraints for the rest of the decade.
Despite the emphasis placed on the iron and steel industry in the Japanese economy and its export success, the industry proved to be mature and declining in the 1980s. Its share of total Japanese exports slipped to only 5.8 percent by 1988. Imports of iron and steel to Japan rose rapidly in the 1980s, reaching US$4.6 billion, or 2.5 percent, of total imports. South Korea, for example, was rapidly moving into certain parts of the industry and managed to penetrate Japanese markets despite opposition from the Japanese industry. As a leader in steelmaking technology by the late 1970s, Japan had also become an important source of technology for South Korea, China, and other developing nations building their own steel industries.
Data as of January 1994