Japan may impose retaliatory duties on U.S. steel products, including ball bearings, in September to counter subsidies paid out to steel firms by Washington under an antidumping program that has been ruled illegal by the World Trade Organization.

This would mark Japan’s first retaliatory tariff hike in connection with a bilateral trade spat.

“It is common sense to follow designated procedure,” over violations of international trade agreements, Chief Cabinet Secretary Hiroyuki Hosoda said Thursday. “We’re just following the rules — we shouldn’t be concerned about whether this will hurt bilateral relations.”

Tariffs on some 10 products would be hiked by about 15 percent, with the value of these hikes estimated at some 8.5 billion yen, according to the Ministry of Economy, Trade and Industry. The move would reduce imports of these products by about 5.6 billion yen in calendar 2005, it estimated. A Finance Ministry committee will make a formal decision on the matter on Aug. 1.

For all of Hosoda’s studied nonchalance, Japan was extremely cautious about doing anything to offend the U.S., waiting for other countries to move first.

At issue is the Byrd Amendment, passed by the U.S. in 2000 to protect local steelmakers hurt by cheaper imports. The amendment imposes tariffs on certain goods and then distributes the proceeds to affected companies. In 2000, these duties were placed on hot-rolled carbon-quality flat steel products from Japan.

The WTO ruled that the antidumping measures violated WTO rules, and approved countertariffs imposed by the European Union on U.S. steel products in May. In June, Japan said it would study similar countermeasures.

Japan is still worried that retaliatory duties will increase negative sentiment within the U.S. Congress amid an ongoing wrangle over Japan’s import ban on U.S. beef, a METI official said.

But in light of the suspected discovery of a third case of mad cow disease in the U.S. on Wednesday, frustration on this score is unlikely to foment any further, he noted.

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