AS THE CARTER administration drifts haplessly toward import quotas on Japanese automobiles, the high costs of those quotas deserve attention. That's why trade restrictions have a bad reputation -- they impose a severe tax on consumers.
In 1978, the last year before the price of gasoline shot upward, Americans bought 1.3 million Japanese cars. Last year they bought 1.8 million. Suppose the administration decided to roll Japanese imports back to the 1978 level. What might that cost Americans?
According to the calculations now being used inside the administration, a reduction of Japanese imports by 500,000 cars a year would raise the price of each imported car by about $700. The cars are popular and, if the supply of them is squeezed down, people will pay premiums to get them. But that isn't the whole cost of the quotas.
The Japanese imports currently provided the only real competition to the domestic manufacturers. If the prices of the imports go up, the prices of the domestic cars are very likely to rise nearly as much. The total increase in all cars' prices, as a result of the quotas, would be nearly $5 billion a year.
In return, as labor correctly argues, some jobs would be created in the American auto plants. A roll-back of half a million imported Japanese cars a year would mean -- according, once more, to the administration's internal estimates -- perhaps 130,000 jobs. That's a cost of roughly $38,000 per year for each job. Who pays the $38,000? It comes from consumers, through the higher prices that they pay for cars.
That's the tax the quotas impose. It doesn't appear in any budget. It doesn't go through any public treasury. It's invisible. But it's a real rax, and not a small one.
Equally important, protection from imports reduces the pressure on the American companies to swing to the smaller, more efficient cars that their customers demand. Protection from the imports is an invitation to a slower, more leisurely transition to cars that can hold their market. Quotas would prove very expensive for the national economy, for the companies and ultimately for the people whom they employ.